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British regulator CMA has blocked Microsoft’s acquisition of Activision. The Competitions and Markets Authority claims that innovation and consumer choice in cloud gaming are at odds with the high-profile move.

Microsoft still has the right of appeal in order to try to reverse the decision. The acquisition involves more than $68 billion. The stumbling block for the CMA is the cloud gaming market, as opposed to the potential impact on the console market. Indeed, the acquisition could cause Microsoft to withdraw the popular Call of Duty from Sony’s PlayStation platform, although it has promised not to do so.

Cloud competition

Earlier this year it was revealed via the CMA that Microsoft Cloud Gaming controls approximately 60 to 70 percent of the cloud gaming market. Microsoft’s streaming service is bundled with its Game Pass subscription, which also allows games to be downloaded locally. The CMA cites the range of Microsoft services that all contribute to the Redmond company’s dominant position. For example, cloud services benefit from the installed base of Xbox owners and Windows users, and the service runs on Microsoft Azure’s global cloud infrastructure and data centers focused on Xbox Cloud Gaming. The dominance would allegedly lead to higher prices and less choice for consumers.

The decision will come as somewhat of a surprise to Microsoft. After all, it recently became clear that the EU, for its part, would likely approve the deal. In addition to EU and UK authorities, Microsoft must also comply with the regulations checked by US competition watchdogs.

Microsoft came up with a number of proposals during the investigation. For example, it was willing to keep certain game franchises available on other platforms in perpetuity. Given the hundreds of millions of potential customers on PlayStation 4/5 and Nintendo Switch, that wouldn’t necessarily have been a negative for the tech giant. The CMA had no desire to regulate the market that way, especially since the cloud gaming market is still growing rapidly.

Also read: Microsoft’s Activision acquisition expected to secure EU approval