Contrary to all forecasts that a “thumbs up” would have been given, United Kingdom’s market regulator known as the CMA has voted on disapproval of Microsoft buying Activision Blizzard in a big surprising turn of events.

The TLDR of their rationale is that they are concerned about Microsoft's reach on Cloud Gaming adding more game catalog to an already well-built Game Pass Cloud and could result in less choice for UK gamers.

With this, it is only the European Zone that could basically have Microsoft engage in courtrooms in three scenarios if they happen to also disapprove the buy out meanwhile, Microsoft already said that it will appeal the decision.

“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.

Microsoft has a strong position in cloud gaming services and the evidence available to the CMA showed that Microsoft would find it commercially beneficial to make Activision’s games exclusive to its own cloud gaming service.

Microsoft already accounts for an estimated 60-70% of global cloud gaming services and has other important strengths in cloud gaming from owning Xbox, the leading PC operating system (Windows) and a global cloud computing infrastructure (Azure and Xbox Cloud Gaming).

The deal would reinforce Microsoft’s advantage in the market by giving it control over important gaming content such as Call of Duty, Overwatch, and World of Warcraft. The evidence available to the CMA indicates that, absent the merger, Activision would start providing games via cloud platforms in the foreseeable future.

The cloud allows UK gamers to avoid buying expensive gaming consoles and PCs and gives them much more flexibility and choice as to how they play. 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.”

CEO of Activision Blizzard reacts:

“Today, the Competition and Markets Authority (CMA), a regulatory agency in the UK, decided not to approve our merger with Microsoft. This isn’t the news we wanted – but it is far from the final word on this deal.

Alongside Microsoft, we can and will contest this decision, and we’ve already begun the work to appeal to the UK Competition Appeals Tribunal. We’re confident in our case because the facts are on our side: this deal is good for competition.

The UK hopes to grow its leadership position in technology, and a combined Microsoft-Activision would accomplish exactly that. At a time when the fields of machine learning and artificial intelligence are thriving, we know the UK market would benefit from Microsoft’s bench strength in both domains, as well as our ability to put those technologies to use immediately.

By contrast, if the CMA’s decision holds, it would stifle investment, competition, and job creation throughout the UK gaming industry.

This merger is a complex process, and I know I’m not the only one frustrated by the hurdles and delays. We’re accustomed to a company culture that moves quickly to accomplish big goals, so it’s tough when we can’t close things out at our usual energetic pace.

We’ll keep pressing our case, because we know that this merger will benefit our employees, the broader UK tech workforce, and players around the world.

I’m going to do everything I personally can to advocate for us and help regulators understand the competitive dynamics in our industry.  What gives me confidence is that, whether on our own or united with another company, we are one of the strongest companies in our industry, poised for continued growth, and building on our incredible IP.

I appreciate your continued hard work and focus, and for continuing to connect and engage our players around the world. This is the best time to be in our field, and you all represent the best of our industry.  We’ll be sure to keep you updated on next steps as they happen.”

After a turbulent year of 2021 were accusations of toxic workplace and even supported by CEO Bobby Kotick, Activision Blizzard announced in 2022 that it accepted a buyout offer from Microsoft, valued at $68.7 billion and slated to be the greatest acquisition in the history of Microsoft and not just Xbox itself.

With the CMA denial, it is the UK and USA with the FTC that has said no while the regulators equivalent of Brazil, Japan (a big blow for Sony), Arabia Saudi, China and South Africa are all right with the buyout.