British watchdog blocks Microsoft's purchase of Activision

April 26 (UPI) -- Britain's Competition and Markets Authority on Wednesday moved to block Microsoft's proposed deal with Activision, citing Microsoft's existing dominance in the cloud sector.

The watchdog said the $68.7 billion acquisition would "reinforce Microsoft's advantage" in the cloud market by giving it control over Activision's gaming franchises including Call of Duty, Overwatch and World of Warcraft.

"Gaming is the U.K.'s largest entertainment sector. Cloud gaming is growing fast with the potential to change gaming by altering the way games are played, freeing people from the need to rely on expensive consoles and gaming PCs and giving them more choice over how and where they play games," said Martin Coleman, chair of the independent panel of experts investigating the deal.

The CMA found in a provisional decision earlier this year that Microsoft's purchase of Activision could "make Microsoft even stronger in cloud gaming, stifling competition in this growing market."

The watchdog noted that Microsoft already accounts for an estimated 60-70% of the global cloud gaming market through its Azure and Xbox Cloud Gaming services in addition to owning the Xbox line of consoles and Windows, the leading PC operating systaem.

It said Microsoft's proposals to remedy its concerns contained "a number of significant shortcomings" including failing to cover different cloud gaming business models, not providing enough openings to providers who wanted to offer games on non-Windows operating systems and standardizing terms and conditions on which games are avialable.

In December, the U.S. Federal Trade Commission filed a complaint against Microsoft in seeking to block the $69 billion deal to buy Activision. Microsoft later filed a response to the FTC charge.