Microsoft’s massive $69 billion acquisition of video game giant Activision Blizzard was dealt a major and possibly game-ending blow this week. The United Kingdom’s Competition and Markets Authority (CMA) announced on Wednesday that it has decided not to allow the deal to go through.

While this isn’t the final word — Microsoft and Activision have at least one extra life, as they can and do plan to appeal — it’s now very much an uphill battle. It shows how, as some US efforts to rein in Big Tech have floundered, other countries are getting results. The CMA’s ruling applies only to the UK, but the global nature of the gaming business means its decision likely will be global, too.

While Microsoft and Activision Blizzard are both major players in the gaming industry and shouldn’t have much trouble carrying on separately, this development does hurt their ambitions to get even bigger. At the time the merger was announced, January 2022, Microsoft said the deal would make it the third-largest gaming company by revenue in the world, behind Tencent and Sony. But there were concerns from gamers (and Microsoft’s competition) that the company would make Activision’s titles exclusive to its own platforms now or in the future, locking them in Microsoft’s ecosystem or forcing them to switch to it if they wanted to keep playing their favorite Activision games.

The UK authority’s decision is also an obstacle that Microsoft didn’t expect. Microsoft has spent years trying to build up its reputation as the good Big Tech company that plays well with others, including governments. But it audaciously made the largest acquisition in its history at a time when Big Tech companies are under more scrutiny than ever. This rebuke is the most significant sign yet that regulators aren’t going for Microsoft’s big move, and if they can’t stop it in the US, they will elsewhere. And if they’re willing to hit Microsoft, they’ll go for just about anyone.

For its part, Microsoft hit back with not-so-veiled threats about how the CMA’s decision will hurt the UK’s economy, as it will make it and possibly others reconsider their dealings in the country.

Microsoft vice chair and president Brad Smith told the BBC that “this decision, I have to say, is probably the darkest day in our four decades in Britain,” and that “the European Union is a more attractive place to start a business than the United Kingdom.”

Activision Blizzard’s take was similar. In a statement, the company said, “The report’s conclusions are a disservice to UK citizens, who face increasingly dire economic prospects. We will reassess our growth plans for the UK. Global innovators large and small will take note that — despite all its rhetoric — the UK is clearly closed for business.”

What it means for gamers is that, assuming the CMA’s decision holds, nothing will really change. They won’t have to worry about being frozen out of their favorite Activision Blizzard games if they’re not Xbox or PC users, or Microsoft refusing to make new versions of those games for non-Microsoft systems and platforms. Microsoft had made deals to keep some of those titles platform-agnostic for a certain number of years to try get regulators’ approval, but rivals like Sony (which clearly has its own reasons for not wanting a major competitor to get any kind of advantage) contended that those concessions weren’t enough.

While Microsoft repeatedly contended that the merger, though huge, still wouldn’t make it the dominant player in a crowded market, the CMA’s reasoning for rejecting the deal was that it would make Microsoft too powerful in a subset of that market: cloud gaming. Microsoft has its Xbox Cloud Gaming and PC Game Pass offerings, and has the Azure cloud computing platform. The UK regulator said cloud gaming was a rapidly growing segment of the gaming industry, and Microsoft’s deal would give it too much of an advantage over competitors. The CMA cited fears that Microsoft would have to increase the price of its Game Pass subscriptions to account for the tens of billions of dollars it spent to acquire Activision, that it would make Activision’s titles exclusive to its own services, and that the games were not open to computers that didn’t have Windows operating systems.

“Cloud gaming needs a free, competitive market to drive innovation and choice. That is best achieved by allowing the current competitive dynamics in cloud gaming to continue to do their job,” Martin Coleman, who chaired the panel that investigated the deal, said in a statement.

The decision was somewhat of a surprise, given that other countries’ regulators approved it and the Financial Times said just a few days ago that the CMA was “expected to support it.” Microsoft believed it had done everything necessary to get the okay, noting that it signed multiyear deals with several cloud gaming providers and platforms to make or continue to make Activision games available to their users. The CMA said it appreciated the effort, but it wasn’t enough.

“The CMA was right to reject Microsoft’s efforts to settle the investigation with behavioral commitments, which are difficult to monitor and easily outpaced by developments in fast-moving markets,” the Open Markets Institute, an anti-monopoly advocacy group, said in a statement, adding that it “urges other competition authorities scrutinizing this deal to take the CMA’s lead and block it outright.”

Activision Blizzard CEO Bobby Kotick had a statement of his own, saying, in part, that the UK regulator’s decision was “far from the final word on this deal” and that he was “frustrated by the hurdles and delays.”

Until now, it looked like the biggest threat to the Microsoft deal would come from the US, as its Federal Trade Commission, chaired by antitrust hawk Lina Khan, sued to block the merger. But there was no guarantee that the FTC would win that case, and the onus would be on the agency to prove that the merger will unfairly harm competition before courts that tend to rule in favor of businesses. We’re still waiting for the European Union’s decision on the merger, but the EU’s competition regulator, the European Commission, has been very vocal about its desire to check Big Tech’s power.

While Microsoft and Activision have said they’re surprised at the UK’s decision, there is some precedent. The CMA also blocked Meta’s $315 million acquisition of Giphy in 2021. That decision was upheld in late 2022, forcing Meta to divest the GIF database and search engine. Microsoft clearly thought it knew enough and had done enough to make this work. Now it looks like the UK’s Competition and Markets Authority will be its final boss battle.