Microsoft’s $69 billion acquisition of Activision Blizzard could harm competition by allowing Microsoft to limit Activision’s video games to proprietary platforms such as Xbox, according to UK officials, in the latest challenge to the tech giant’s blockbuster acquisition.
The proposed deal, which would make Microsoft (MSFT) the world’s third-largest video game publisher, could harm tens of millions of UK gamers by raising prices or providing fewer options, according to the UK’s competition regulator.
The provisional finding by the UK Competition and Markets Authority is yet another sign of global antitrust regulators’ growing opposition to the deal. The US Federal Trade Commission sued to stop the acquisition in December on similar grounds, and the European Union is also looking into it.
The increased scrutiny reflects how policymakers are refocusing attention on a company that once faced historic antitrust allegations decades ago but has largely avoided recent criticisms aimed at competitors such as Amazon, Apple, Meta, and Google.
As a result of the agreement, Microsoft may seek to weaponize popular Activision franchises such as “Call of Duty” by making them exclusive to platforms controlled by Microsoft, according to the UK CMA, adding that only a few titles on the market “play an important role in driving competition between consoles,” including Xbox and Sony’s PlayStation.
Furthermore, the CMA stated that the same economic incentives would encourage Microsoft to limit the games to its own cloud gaming platform, a nascent market. Cloud gaming services allow players to access video games without having to download them to a local PC or console.
Microsoft has stated that it is willing to make “Call of Duty” available on competing platforms for a 10-year period with no restrictions on pricing, features, content, or other terms.
“We are committed to offering effective and easily enforceable solutions that address the CMA’s concerns,” Rima Alaily, Microsoft’s deputy general counsel, said in a statement Wednesday.
Activision said in a separate statement that the findings are “provisional” and that “both parties have a chance to respond.”
“We hope that between now and April, we will be able to help the CMA better understand our industry,” Activision said in a statement.
According to the CMA’s findings on Wednesday, Microsoft could potentially address the competitive concerns by spinning off the “Call of Duty” franchise, or by spinning off the business units Activision and Blizzard, which oversee “Call of Duty” and another major property, “World of Warcraft.”
The recommendations are the result of a thorough second-stage investigation into the transaction, which was launched last fall after an initial investigation concluded in September that the acquisition raised competitive concerns.
The CMA has set a March 1 deadline for public comments in response to its latest findings. It will release its final report on April 26.