He fought desperately, but ultimately in vain. Yesterday Rupert Murdoch bowed to the inevitable and dropped his bid to take full control of the satellite broadcaster BSkyB. The media mogul had executed two dramatic manoeuvres within a week in order to keep the acquisition alive: the closure of the 168-year-old News of the World and the withdrawal of News Corp's promises to sell Sky News (which triggered a Competition Commission inquiry). But when the will of Parliament was starkly revealed yesterday, with the cross-party consensus that News Corp should back away, the game was finally up.

"It has become too difficult to progress in this climate," said News Corp's chairman, Chase Carey, with wonderful understatement yesterday. He might have been describing the cancellation of an afternoon walk because of some inclement weather, rather than the collapse of a £12bn takeover deal that could have dramatically reshaped the UK media landscape.

News Corp also said that it remains committed to BSkyB. And the firm still owns 39 per cent of the broadcaster. But as the former prime minister Gordon Brown asked in Parliament yesterday: is News Corp "fit and proper" to own even that sizeable stake, given what has emerged in recent weeks? The broadcasting regulator, Ofcom, must continue to examine that question, even though the acquisition attempt is over. This is not the end of this crisis for Mr Murdoch.

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Some within the Murdoch orbit were privately suggesting that what took place yesterday shows that the UK is closing its doors to foreign investment. This is desperate nonsense. This was no normal takeover. It would have created the UK's largest media conglomerate, with potentially catastrophic implications for competition and diversity in the sector.

And these are no normal circumstances. One of Mr Murdoch's newspapers stands accused of the most disgusting behaviour – hacking the phones of terrorism and murder victims and bribing the police. There is a strong smell of a cover-up around executives in his organisation. The police are investigating with a view to bringing charges. An important public inquiry into the links between Mr Murdoch's publications, the Metropolitan Police and successive British governments is about to begin its work. It would have been ridiculous for the authorities to have allowed Mr Murdoch to embark on a commercial expansion at a time when the propriety of his organisation – and its apparently corrupting effects on both the police and politics – is being examined.

Britain is open to foreign investment – indeed much more open than any other economy. But the fact that Britain is open for business does not mean the integrity of our public institutions is for sale to the highest bidder, or that powerful media tycoons can get what they want regardless of the behaviour of their organisations. That was a lesson that Mr Murdoch – after many decades of exceptional treatment from the British authorities – was finally compelled to take on board yesterday. And British democracy is the stronger for it.

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