UK regulator blocks Microsoft’s acquisition of "Call of Duty" maker Activision Blizzard

Microsoft’s (MSFT) $68.7 billion deal to acquire "Call of Duty" maker Activision Blizzard (ATVI) has been rejected by the United Kingdom’s antitrust authority.

Following months of analysis over the tie-up, the UK’s Competition and Markets Authority (CMA) on Wednesday said the deal threatens to “alter the future of the fast-growing cloud gaming market” in a way that could lead to “reduced innovation and less choice for UK gamers over the years to come."

Activision shares dropped nearly 9% in morning trading on Wednesday, while Microsoft's stock was up almost 7%.

In response to the decision, Microsoft Vice Chair and President Brad Smith said the company remains fully committed to the acquisition and plans to appeal. Smith also accused the CMA of basing its decision on a flawed understanding of the gaming and cloud markets.

“We have already signed contracts to make Activision Blizzard’s popular games available on 150 million more devices, and we remain committed to reinforcing these agreements through regulatory remedies,” Smith said in a statement sent to Yahoo Finance. “We’re especially disappointed that after lengthy deliberations, this decision appears to reflect a flawed understanding of this market and the way the relevant cloud technology actually works.”

Smith went on to argue that Microsoft’s already completed partnerships with gaming market players — including Nintendo, Steam, NVIDIA, Boosteroid, Ubitus and EE — serve as proof of Microsoft’s commitment to diverse access to gaming.

Activision, for its part, said it, too, would appeal the decision and threatened to pull back on its investment in the UK. The company also accused the CMA of contradicting the UK’s ambitions to become an attractive country for technology-building businesses.

“The report’s conclusions are a disservice to UK citizens, who face increasingly dire economic prospects. We will reassess our growth plans for the UK. Global innovators large and small will take note that — despite all its rhetoric — the UK is clearly closed for business,” the company said in a statement.