Microsoft's $68.7 billion Activision takeover blocked by UK competition regulator

• Microsoft's $68.7 billion takeover of Activision has been blocked by UK regulators.
• The UK's CMA blocked the deal on Wednesday over concerns antitrust concerns.
• The move marks a big blow for Microsoft, after striking the deal in January 2022.

Microsoft's $68.7 billion takeover of "Call of Duty" developer Activision has been blocked by the UK's competition regulator, marking a devastating blow to the blockbuster deal.

The UK's Competition and Markets Authority (CMA) said on Wednesday that the deal, struck in January 2022, risked "stifling competition" in the market amid concerns that Microsoft would make Activision's lucrative games exclusive to its services at the expense of consumers.

"The CMA has prevented Microsoft's proposed purchase of Activision over concerns the deal would alter the future of the fast-growing cloud-gaming market, leading to reduced innovation and less choice for UK gamers over the years to come," the regulator said.

The CMA first launched its in-depth review of the deal in September 2022, announcing in its provisional findings in February this year that the merger would harm Microsoft's competitors, which include the likes of PlayStation maker Sony.

According to the CMA, Microsoft already accounts for around 60-70% of global cloud gaming services through its Xbox platform and Azure. The deal, it said, "would reinforce Microsoft's advantage in the market by giving it control" over games such as "Call of Duty" and "Overwatch."

In response, Microsoft president Brad Smith said the company remains "fully committed to this acquisition and will appeal," with the CMA's decision rejecting "a pragmatic path" to addressing competition concerns while discouraging technology innovation and investment in the UK.

"We're especially disappointed that after lengthy deliberations, this decision appears to reflect a flawed understanding of this market and the way the relevant cloud technology actually works," Smith said.

Microsoft had submitted a proposal to address the concerns the CMA flagged, but found that the proposal contained "a number of significant shortcomings connected with the growing and fast-moving nature of cloud gaming services."

Activision's shares fell sharply by 11% in pre-market trading.

This is a developing story. Check back for updates ...