Chiefs at Microsoft and Activision Blizzard vowed to fight a UK Competition and Markets Authority (CMA) decision to block the former’s big money acquisition of its gaming peer, a judgement made due to concerns of a negative impact on the cloud gaming sector.

In separate statements, Microsoft and Activision Blizzard confirmed their intent to contest the regulator’s decision.

Microsoft president and vice chair Brad Smith said his company remained “fully committed” to the acquisition, pointing to its attempts to alleviate competition concerns and the signing of contracts to make Activision Blizzard games available more widely.

“We’re especially disappointed that after lengthy deliberations, the decision appears to reflect a flawed understanding of this market and the way relevant cloud technology actually works.”

Activision Blizzard CEO Bobby Kotick said the UK judgement was “far from the final word” on the matter and noted it had already started work towards an appeal at a UK tribunal.

The CMA’s decision followed a lengthy investigation into the proposed deal which concluded the buyout of Activision Blizzard would cut choice and innovation for consumers in the UK.

Microsoft had offered some remedies to address initial concerns raised by the authority, but the CMA described these as containing “significant shortcomings connected with the growing and fast-moving nature of cloud gaming services”.

In the judgement, chair of the CMA’s panel of experts investigating the case Martin Coleman explained: “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.”

“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.”

Alongside the UK, the acquisition also needs to be cleared by authorities at the European Commission and in the US.