So, Microsoft’s plan to acquire Activision Blizzard for a whopping US$69 billion has been blocked by the UK’s Competition and Markets Authority (CMA) over concerns that it would harm the growth of cloud gaming. This comes after the CMA provisionally opposed the deal in February due to similar concerns about cloud gaming.

However, last month, the CMA seemed to change its mind and stated that new evidence suggested the merger would not significantly harm competition in console gaming. This led many to believe that the deal would be approved this month and subsequently by the EU in May. But the CMA’s concerns about cloud gaming have apparently caused a major setback.

The CMA argues that Microsoft’s acquisition of Activision would further strengthen its dominance in the market by giving it control over important gaming content such as Call of Duty and World of Warcraft. Microsoft already controls an estimated 60-70% of global cloud gaming services, and the CMA is worried that the company would make Activision’s games exclusive to its own cloud gaming service, thereby hindering competition. The CMA also found Microsoft’s proposed solutions to alleviate these concerns to be insufficient.

Microsoft plans to appeal the CMA’s decision, and it remains to be seen whether this will be a fatal blow to the acquisition. Activision shares have already dropped 11% in response to the news. It’s interesting to note that the CMA’s main concerns revolve around cloud gaming, while Sony’s opposition to the deal centres on access to Call of Duty. Nvidia, one of Microsoft’s competitors in the cloud gaming space, has expressed support for the acquisition and signed a 10-year deal with Microsoft to continue bringing Activision’s games to Nvidia platforms. It’s unclear whether the UK’s refusal will prompt the EU and the US to follow suit.

The UK’s Competition and Markets Authority (CMA) has blocked Microsoft’s US$69 billion acquisition of Activision Blizzard over concerns of potential harm to competition in the cloud gaming market. Despite some recent indications that the deal might be approved, the CMA’s concerns regarding Microsoft’s dominance in the cloud gaming space seem to have ultimately derailed the acquisition. Microsoft has announced that it will appeal the ruling, but it remains to be seen what the outcome of that appeal will be. Meanwhile, the decision is likely to have significant implications for both companies and could potentially impact future mergers and acquisitions in the tech industry.