The CMA said it is "concerned that the agreement could change the future of the fast-growing cloud gaming market, leading to reduced innovation and less choice for UK players in the coming years," according to a statement from the regulator on Wednesday.
London had launched in mid-September an in-depth investigation into this operation to $ 69 billion between the giants of online video games, a record sum for the sector, made public in early 2022.
Microsoft's acquisition of Activision Blizzard, which publishes the hits "Call of Duty", "World of Warcraft" and "Candy Crush", would create the 3rd player in the video game industry in terms of turnover, behind the Chinese Tencent and the Japanese Sony, manufacturer of the PlayStation.
The CMA had considered at the end of March that the operation did not ultimately pose a competition problem for game consoles, but that concerns persisted on dematerialized gaming services.
"Microsoft has engaged constructively with us to try to resolve these issues ... but their proposals have not been enough," said Martin Coleman, chair of the CMA's panel of independent experts in charge of the investigation.
"Cloud gaming needs a free and competitive market to drive innovation and choice (for consumers). The best way to achieve this is to allow the current competitive dynamics of cloud gaming to continue," he added, quoted in the CMA statement.
"We remain fully committed to this acquisition and will appeal," Microsoft said Wednesday in a statement sent to AFP.
"We are particularly disappointed that after much deliberation, this decision appears to reflect a misunderstanding of this market and how cloud technology actually works," according to Microsoft.
The merger also raises concerns across the Atlantic, where the US competition authority (FTC) launched lawsuits in December to block the deal, and in the EU, which has also opened an investigation into whether the acquisition would make Activision's games exclusive to Xbox.
The U.K. market is smaller than the U.S. or the European Union, but if London's block is upheld on appeal, it could force Microsoft to abandon the deal.
© 2023 AFP