Today, the United Kingdom blocks Microsoft’s proposed $69 billion acquisition of Activision Blizzard on the grounds that it could harm cloud gaming.

The original deal, proposed greater than a 12 months in the past, would have been the most important acquisition in historical past. But, in response to the UK’s Competition and Markets Authority, the deal may undermine the cloud gaming market earlier than it bought off the bottom, hurting the competitors.

Microsoft launched its cloud gaming service in 2020 as Project xCloud, which is now a part of its Game Pass Ultimate service. As the UK CMA identified, cloud gaming permits customers with high-speed broadband to keep away from paying for a recreation console. Instead, they’ll stream video games over the Internet, taking part in them on a distant server. Most of Microsoft’s Game Pass Ultimate companies (available for cheap if you know how) can be found by way of cloud gaming. The CMA was afraid of Activision launching its personal cloud gaming service. Acquiring Activision would squash that competitors, the CMA stated.

“Allowing Microsoft to take such a strong position in the cloud gaming market just as it begins to grow rapidly would risk undermining the innovation that is crucial to the development of these opportunities,” the UK CMA said in a press release. According to the CMA, cloud gaming will likely be price 1 billion kilos within the UK by 2026.

Microsoft apparently tried to discount, providing a counteroffer that may govern what video games can be accessible on what platforms over a ten-year interval. The CMA finally rejected it on the grounds that it didn’t handle cloud gaming, wasn’t sufficiently open to different working programs, and would “standardize the terms and conditions on which games are available.”

The company additionally had considerations with Microsoft elevating the worth of Game Pass, post-merger. “Microsoft engaged constructively with us to try to address these issues and we are grateful for that, but their proposals were not effective to remedy our concerns and would have replaced competition with ineffective regulation in a new and dynamic market,” stated Martin Coleman, chair of the unbiased panel of specialists conducting the investigation for the U.Okay.

So, what now?

Microsoft president Brad Smith stated in a press release that the corporate will enchantment. “We have already signed contracts to make Activision Blizzard’s popular games available on 150 million more devices, and we remain committed to reinforcing these agreements through regulatory remedies,” he stated.

History does provide some perception on what Microsoft may do. In 2009, Microsoft shipped a version of Windows 7 and 7 E to Europe to deal with considerations that Microsoft was illegally bundling Internet Explorer contained in the working system. But how Microsoft may apply that mannequin to a recreation service (pull Game Pass out of the UK? Refuse to supply Activision video games to UK cloud gaming audiences?) is unclear.

It’s price noting that the UK isn’t the one authorities towards the deal –the U.S. Federal Trade Commission is too.

Smith’s assertion does indicate that Microsoft intends to go ahead with the Activision Blizzard deal. Whether that’s nonetheless attainable or not is in query.