The decision was made by the UK Competition and Markets Authority (CMA) after the $68.7 billion (£55bn) deal failed to effectively address the concerns in the cloud gaming sector the CMA outlined in provisional findings in February. 

The proposed takeover would have seen Microsoft acquire some of the biggest IPs in gaming, such as Call of Duty, Candy Crush, and Tony Hawk Pro Skater, on top of the hit games they already own, such as Minecraft, Halo, and Age of Empires. 

“Cloud gaming needs a free, competitive market to drive innovation and choice,” said Martin Coleman, CMA panel chair. “Microsoft already enjoys a powerful position and head start over other competitors in cloud gaming and this deal would strengthen that advantage giving it the ability to undermine new and innovative competitors.”

According to the CMA, Microsoft proposed a number of remedies to address the concerns raised about the acquisition. However, after a considerable examination, the CMA found shortcomings in the following areas: 

• No sufficient coverage of different cloud gaming service businesses models such as multigame subscription services
• Did not sufficiently enable providers to offer versions of games on PC operating systems other than Windows. 
• The merger would standardize the terms and conditions that the games available, as opposed to them being determined by the dynamism and creativity of competition in the market, as would be expected in the absence of the merger.

Commenting on the investigation, Coleman added: “Gaming is the UK’s largest entertainment sector. Cloud gaming is growing fast with the potential to change gaming by altering the way games are played, freeing people from the need to rely on expensive consoles and gaming PCs and giving them more choice over how and where they play games. This means that it is vital that we protect competition in this emerging and exciting market.”

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As it stands, Microsoft already stands for an estimated 60-70% of the global cloud gaming services. As well as owning Xbox consoles, PC operating system Windows, and cloud computing infrastructure Azure. 

The UK cloud gaming market is predicted to be worth £11 billion globally by the end of 2026, and £1bn in the UK. The number of monthly active users in the IL more than tripled between 2021 and 2022.