Shares of Activision Blizzard (NASDAQ: ATVI) plunged in pre-market trading on Wednesday after U.K.’s Competition and Markets Authority (CMA) stated that it would “prohibit” the merger as it is likely to lead to Microsoft’s (MSFT) complete dominance in the cloud gaming services market globally. The regulator added that Microsoft already has a market share in the range of 60% to 70% in this market and “even a moderate increment to Microsoft’s strength may be expected to substantially reduce competition in this developing market, to the detriment of current and future cloud gaming users.”
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The CMA commented, “We found that Activision’s titles—including CoD, World of Warcraft, and Overwatch—will be important for the competitive offering of cloud gaming services as the market continues to grow and develop…after the Merger, Microsoft would find it commercially beneficial to make Activision’s titles exclusive to its own cloud gaming service.”
This news came even as the New York Post reported on Tuesday that Microsoft was looking at closing the $69 billion deal despite the Federal Trade Commission’s (FTC) move last year to block the deal over antitrust concerns.
ATVI stock has gained more than 10% in the past year.