Britain’s competition regulator has ruled the proposed Microsoft acquisition of Call of Duty developer Activision Blizzard might result in reduced competition in the UK video game industry.
In a provisional judgement, the CMA said the deal could result in higher prices, fewer choices, or less innovation for UK gamers.
The findings follow a wide-ranging investigation conducted over the last five months to understand the market and potential impact of the deal.
This has included holding site visits and hearings to hear directly from Microsoft and Activision and analysing over 3mln internal documents from the two businesses to understand their views on the market.
Microsoft and rivals Sony both heavily rely on Activision’s Call of Duty (CoD) franchise to remain competitive.
“Evidence suggests that, after the merger, Microsoft would find it commercially beneficial to make CoD exclusive to [its console] Xbox,” the CMA stated in its findings.
The CMA also noted Microsoft would benefit in making Activision’s games exclusive to its own cloud gaming service, reducing the competition it would face in the UK cloud gaming market.
Microsoft already accounts for an estimated 60%-70% of global cloud gaming services and also has other important strengths in cloud gaming from owning Xbox, the leading PC operating system (Windows) and a global cloud computing infrastructure (Azure and Xbox Cloud Gaming).
The US tech giant announced in January 2022 that it would pay $68.7bn in cash for Activision Blizzard.
A final decision from the CMA is expected in the coming months, with the European Commission and FTC also investigating the deal.