London | Microsoft's stalled USD 68.7 billion deal to buy video game company Activision Blizzard has hit a fresh hurdle in the United Kingdom, where the antitrust watchdog said on Wednesday that it will stifle competition and hurt gamers.

Britain's Competition and Markets Authority said its in-depth investigation found that the deal could strengthen Microsoft's position in the growing cloud gaming market, “harming UK gamers who cannot afford expensive consoles.” The blockbuster deal also could hurt British gamers by “weakening the important rivalry” between Microsoft's Xbox console and Sony's rival PlayStation machines, the watchdog said in a provisional report.

The all-cash deal, which is set to be the largest in the history of the tech industry, is facing opposition from Sony and pushback from regulators in the US and Europe because it would give Microsoft control of popular game franchises such as Call of Duty, World of Warcraft and Candy Crush.

Microsoft's deputy general counsel, Rima Alaily, said the company is “committed to offering effective?and?easily?enforceable solutions?that address the CMA's concerns.” The UK antitrust investigation is now set to drag on for a few more months. The regulator said it will now seek feedback, including possible options to address its competition concerns, from interested parties for its final report due April 26.

The move dashes Microsoft's hopes that a speedy favourable outcome could help it resolve a lawsuit brought by the US Federal Trade Commission.

The FTC has sought to block the deal, arguing that the merger could violate antitrust laws by suppressing competitors to the Xbox game console and its growing game subscription business.

Microsoft told the FTC's administrative judge in January that it was working to resolve the UK investigation, as well as a separate probe in the European Union, and hoped to bring back proposed remedies to U.S. regulators.

The Activision Blizzard deal is one of several regulatory hassles for Microsoft in Europe, amid expanded scrutiny for Big Tech companies on both sides of the Atlantic over worries that they have become too dominant.