The UK market watchdog on Thursday announced going for an in-depth probe into Microsoft’s $68.7 billion all-cash deal to acquire gaming giant Activision Blizzard, the maker of Call of Duty (CoD), if its concerns over antitrust practices are not met.
The Competition and Markets Authority (CMA) said it is concerned that Microsoft’s anticipated purchase of Activision Blizzard “could substantially lessen competition in gaming consoles, multi-game subscription services, and cloud gaming services (game streaming)”.
“Following our Phase 1 investigation, we are concerned that Microsoft could use its control over popular games like Call of Duty and World of Warcraft post-merger to harm rivals, including recent and future rivals in multi-game subscription services and cloud gaming,” said Sorcha O’Carroll, Senior Director of Mergers at the CMA.
Microsoft, together with Sony and Nintendo, have led the market for gaming consoles for the past 20 years with limited entries from new rivals.
Activision Blizzard has some of the world’s best-selling and most recognisable gaming franchises, such as Call of Duty and World of Warcraft.
The CMA said in a statement that it is concerned that if Microsoft buys Activision Blizzard, it could harm rivals, including recent and future entrants into gaming, by refusing them access to Activision Blizzard games or providing access on much worse terms.
The watchdog said it received evidence about the potential impact of combining Activision Blizzard with Microsoft’s broader ecosystem.
Microsoft already has a leading gaming console (Xbox), a leading cloud platform (Azure), and the leading PC operating system (Windows OS), all of which could be important to its success in cloud gaming.
“The CMA is concerned that Microsoft could leverage Activision Blizzard’s games together with Microsoft’s strength across console, cloud, and PC operating systems to damage competition in the nascent market for cloud gaming services,” the authority said.
Microsoft and Activision Blizzard now have “5 working days to submit proposals to address the CMA’s concerns”.
“If our current concerns are not addressed, we plan to explore this deal in an in-depth Phase 2 investigation to reach a decision that works in the interests of UK gamers and businesses,” said the CMA.