Microsoft’s $69 billion acquisition of Activision raises concerns among UK regulators, who fear that the deal will harm competition

Microsoft Corp’s $69 billion acquisition of “Call of Duty” maker Activision Blizzard could harm competition in gaming consoles, subscription services, and cloud gaming, according to Britain’s antitrust regulator, and it should be thoroughly investigated.

The Competition and Markets Authority (CMA) warned that if Microsoft refused to give competitors access to Activision’s best-selling games, the deal, the largest ever in gaming, could harm the industry.

“We are concerned that Microsoft may use its post-merger control over popular games such as ‘Call of Duty’ and ‘World of Warcraft’ to harm rivals, including recent and future rivals in multi-game subscription services and cloud gaming,” the CMA stated.

According to the CMA, Microsoft, with Xbox, and its rivals Sony and Nintendo, have led the console market for 20 years, with few new entrants.

Microsoft President and Vice Chair Brad Smith stated, “We want people to have more access to games, not less.”

“Sony, as the industry leader, says it is concerned about ‘Call of Duty,’ but we have stated that we are committed to making the same game available on both Xbox and PlayStation on the same day,” he said.

Several analysts characterized the move as unsurprising, claiming that the agreement would not be anti-competitive if competitors were granted access to Microsoft games, as Microsoft has promised.

Microsoft should provide more assurances and put specifics about exclusivity in writing, according to Atlantic Equities analyst Kunaal Malde.

Activision still expects the transaction to close in Microsoft’s fiscal year ending in June 2023. Companies have until September 8 to submit proposals in response to the CMA’s concerns.

Microsoft’s stock was down 1.2%.

CLOUD GAMES
The agreement, announced in January, will need to be approved by the United States as well as other major jurisdictions such as the European Union and China.

According to a source familiar with the matter, Microsoft would pay a $3 billion break fee if the deal fell through, implying the company was confident of winning antitrust approval.

According to the CMA, Microsoft is well positioned to succeed in cloud gaming because it has a leading cloud platform in Azure, as well as the leading PC operating system in Windows OS and Xbox.

It claimed that these advantages, combined with Activision’s games, could stifle competition in the nascent market for cloud gaming services.

Microsoft announced in a blog post on Thursday that it would make major Activision games available on its Game Pass subscription service as well as other consoles and mobile devices via cloud game streaming technology.