Cloud gaming is a growing market – they're preventing the deal on the hypothesis that it will give Microsoft a huge advantage in a growing market.
Nowadays Stadia is dead, Xcloud is kind of usable under the condition you use a controller (which makes it a non-started for pretty much any non first-person game) and pay for Game Pass. Geforce Now is still going strong, has much better and stable quality and is the gold standard.
How does any large company build into a new/growing market without having a "huge advantage"? Do they have to wait until the market is matured from smaller companies before they can get into that market?