Microsoft's Activision takeover blocked in UK

Microsoft's $68.7bn (£55m) deal to buy video game company Activision Blizzard has been blocked in the UK by the Competition and Markets Authority.

The proposed takeover would see Microsoft acquire such hit titles as Call of Duty and Candy Crush.

But the regulator said it was concerned the deal would offer reduced innovation and less choice for gamers in the fast-growing cloud gaming business.

Microsoft said it would appeal against the decision.

The CMA said it was not concerned that the deal would distort competition in the console gaming market.

But Martin Coleman, who chaired an independent panel that investigated the proposal for the regulator, said it was vital to protect competition in the "emerging and exciting market" of cloud gaming.

"Microsoft already enjoys a powerful position and head start over other competitors in cloud gaming and this deal would strengthen that advantage giving it the ability to undermine new and innovative competitors," he added.

He said Microsoft had submitted plans to address the CMA's concerns, but they were not effective and "would have replaced competition with ineffective regulation".

"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," he added.

To go through, the deal has to be approved by regulatory bodies in the UK, United States and European Union.

The CMA is the first of the three regulators to rule, meaning its decision could scupper the whole takeover.