Microsoft says blocked Activision Blizzard merger marks its "darkest day" in the UK

Dealing with cyber-security threats? Just another day at the office. Watching your $68.7 billion merger bite the dust? Unfathomable.

Microsoft president Brad Smith says the decision to block its Activision Blizzard merger in the UK marks the company's "darkest day" in the country.

Yesterday, UK regulator the Competition and Markets Authority (CMA) quashed the $68.7 billion acquisition over fears it might allow Microsoft to dominate the cloud gaming industry, stifling innovation and competition.

Both Microsoft and Activision intend to appeal the verdict, but during an interview with the BBC, Smith suggested the decision has left Microsoft questioning its relationship with Britain.

"We're of course very disappointed in the CMA's decision, but more than that, unfortunately, I think it's bad for Britain," said Smith. "The business community, the investment community, and the technology sector around the world have been following this case, and the strong message the CMA has sent is, not just to surprise anyone who fully expected this acquisition to be approved, but to send a message that I think will discourage innovation and investment in the United Kingdom."

Smith said the impact of the decision will be far-reaching, and claimed the move represented the company's "darkest day" in its 40-year relationship with the UK, during which time it has played a "vital role, not just supporting businesses and non-profits, but even defending the nation from cyber-security threats."

"[This decision] does more to shake our confidence in the future of the opportunity to grow a technology business in Britan than we've ever confronted before," he added.

The CMA stands firm

During another interview with the BBC, CMA chief executive Sarah Cardell pushed back and said the regulator has a duty to support competition in the UK.

Cardell suggested the move actually shows "the UK is absolutely open for business" and is intent on creating an environment where a "host of different companies can compete effectively, and grow and innovate."

Ultimately, she believes the CMA's ruling will enable a wide variety of companies, both "large and small," to continue competing and expanding in the UK cloud gaming market.

In its ruling, the CMA noted the UK cloud gaming market is forecast to be worth up to £11 billion globally and £1 billion in the UK by 2026, and claimed the Activision Blizzard merger would only "reinforce Microsoft's advantage."

"Microsoft already accounts for an estimated 60-70 percent 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)," said the CMA.

"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."

For more on Microsoft's ongoing Activision Blizzard merger, be sure to check out regularly updated Rundown.

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