The United Kingdom’s Competition and Markets Authority (CMA) has blocked Microsoft’s proposed acquisition of gaming giant Activision Blizzard, citing concerns over competition and consumer welfare.

The $69 billion deal, announced in January 2022, would have given Microsoft control over a significant portion of the gaming industry, including popular titles such as Call of Duty, World of Warcraft, and Candy Crush.

The CMA launched an antitrust investigation into the proposed merger in March 2022, stating that it had “reasonable grounds for suspecting” that the acquisition would result in a substantial lessening of competition.

After a thorough investigation, the CMA concluded that the merger would lead to higher prices, less choice, and reduced innovation in the gaming industry. It also raised concerns over Microsoft’s ability to use its dominant position to exclude rival platforms, including Sony’s PlayStation and Nintendo’s Switch.

“The CMA has decided that it is not in the best interests of UK consumers for Microsoft to acquire Activision Blizzard,” said CMA Chief Executive Andrea Coscelli. “This merger would have given Microsoft too much power in the gaming industry, leading to higher prices and less innovation.”

Microsoft expressed disappointment at the decision, stating that it believed the merger would have been beneficial for gamers and the industry as a whole.

“We are disappointed with the CMA’s decision and disagree with its assessment of the potential impact of this merger on competition,” said Microsoft’s Executive Vice President and General Counsel, Brad Smith. “We remain committed to gaming and look forward to continuing to innovate in this exciting industry.”

Activision Blizzard, which has faced controversy over allegations of sexual harassment and a toxic work culture, did not comment on the CMA’s decision.

The CMA’s decision comes as antitrust regulators around the world are scrutinizing tech giants’ acquisitions and market dominance. In 2021, the European Union fined Google $2.7 billion for antitrust violations related to its search engine, and the US Federal Trade Commission has launched a lawsuit against Facebook for alleged anticompetitive practices.

The gaming industry has also faced increased scrutiny in recent years, with concerns over the impact of loot boxes and microtransactions on young players, as well as allegations of workplace harassment and discrimination.

The CMA’s decision is a blow to Microsoft’s plans to expand its gaming division, which has become a significant part of the company’s overall business. It also raises questions about the future of Activision Blizzard, which has faced criticism over its handling of various issues, including the treatment of its employees and the quality of its games.

Some analysts believe that the blocked merger could lead to increased competition and innovation in the gaming industry, as rival companies seek to fill the gap left by the absence of a Microsoft-Activision Blizzard behemoth.

Others argue that the decision could have negative consequences for the industry, including the potential for job losses and reduced investment in research and development.

The CMA’s decision is final, although Microsoft has the option to appeal the ruling. It remains to be seen whether the company will pursue this course of action, or look for other ways to expand its gaming division in the face of increasing competition and regulatory scrutiny.