The deal involves best-selling game Call of Duty

Microsoft and Activision Blizzard have claimed the UK is “closed for business” after the Competition & Markets Authority halted their proposed $68.7 billion combination.

Industry analysts warned that blocking the gaming industry’s biggest-ever takeover is a major setback for the UK’s ambitions to be a tech hub.

Lulu Cheng Meservey, of Activision, which makes the Call of Duty and Candy Crush games, said: “Despite all its rhetoric — the UK is closed for business.”

Microsoft president Brad Smith added: “The CMA’s decision rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the UK.”

He said there would be an appeal against the decision.

“We have already signed contracts to make Activision Blizzard’s popular games available on 150 million more devices and remain committed to reinforcing these agreements through regulatory remedies.,” he said.

“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.”