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The British regulator initially said in February that the deal would hurt competition for gaming consoles like the PlayStation and the nascent cloud gaming industry, which involves harnessing the power of remote data centers to stream a game to a device like an iPhone or computer. But in late March, it reversed course and said that it no longer believed the deal posed a threat to Sony, which seemed to put Microsoft in a strong position.
Instead, the C.M.A. focused on the cloud gaming market, which has been around for just a few years, and focused on the possibility that cloud gaming could explode in popularity, eventually being worth $1.3 billion in Britain and $14 billion globally by 2026.
“The cloud allows U.K. gamers to avoid buying expensive gaming consoles and PCs and gives them much more flexibility and choice as to how they play,” the C.M.A. wrote in its ruling on Wednesday. “Allowing Microsoft to take such a strong position in the cloud gaming market just as it begins to grow rapidly would risk undermining the innovation that is crucial to the development of these opportunities.”
In the future, cloud gaming could untether gamers from consoles and shift the focus from hardware to technology that allows games to be streamed from remote data centers. Paired with Xbox Game Pass, Microsoft’s monthly game subscription service that has more than 25 million subscribers, it could be a powerful tool. But it has not yet been widely adopted, and early forays into cloud gaming, from companies like Microsoft, Google and Amazon, have struggled. The technology still encounters frequent glitches and requires a strong Wi-Fi connection.
“Cloud gaming longer term could be very big, but it would require a massive shift in how games are made and sold,” said David Gibson, a senior analyst for MST Financial, a financial services company based in Australian.
In recent months, Microsoft signed a number of deals promising it would allow Activision’s games to be played for 10 years on cloud streaming platforms, such as Nvidia’s GeForce Now streaming service. But the C.M.A. said those solutions did not cover enough cloud business models.
The agency said that Microsoft already had a significant edge as cloud gaming gained prominence, accounting for 60 to 70 percent of cloud gaming services worldwide. The C.M.A. said if the deal closed, Microsoft was likely to benefit from making Activision’s games exclusive to its own cloud gaming platform, called Xbox Cloud Gaming, which could harm consumers.
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