British antitrust regulators on Wednesday dealt a major setback to Microsoft’s plans to acquire the video game giant Activision Blizzard for $69 billion, blocking the proposed deal and handing a notable win to government enforcers who want to rein in Big Tech.

In deciding that Microsoft’s proposals to ensure the acquisition did not harm competition “failed to effectively address the concerns in the cloud gaming sector”, a nascent part of the gaming industry, the Competition and Markets Authority inflicted a possibly fatal blow to what would be the largest consumer tech acquisition since AOL bought Time Warner two decades ago.

The surprising ruling was a clear victory for proponents of regulating tech giants like Microsoft, Amazon, Apple, Google and Meta, Facebook’s parent company. Their efforts, fuelled by fears that the companies wield too much power over online commerce and communications, have been stymied in the US by recent court losses and legislative failures.

“This is a very big win for the broader effort to realign anti-trust enforcement,” said William E. Kovacic, a former chairman of the Federal Trade Commission. Microsoft said it planned to appeal the ruling.

Much of the focus around whether consumers would be harmed by the deal had focused on the market for expensive gaming consoles, but the CMA in its ruling zeroed in on cloud gaming, a relatively new technology that allows people to stream games to their devices.

The British agency’s announcement bolstered efforts by the FTC chair, Lina Khan, who has made challenging mergers a central part of her plan to rein in the tech giants. After the American agency filed a lawsuit in December to block the video game deal, Microsoft swiftly tried to isolate Khan by pushing British and European authorities to reach legal settlements that would address their concerns and allow the deal to go through.

New York Times News Service