The UK competition watchdog has raised concerns about the US$68.7bn (£60bn) takeover of Activision Blizzard by Microsoft Corporation (NASDAQ:MSFT).
The Competition and Markets Authority (CMA) warned on Thursday afternoon that what would be the biggest ever gaming industry merger, “could substantially lessen competition in gaming consoles, multi-game subscription services, and cloud gaming services”.
Activision makes the extremely popular Call of Duty game, as well as Candy Crush and World of Warcraft.
Microsoft already owns Xbox, one of the leading gaming consoles, as well as the leading PC operating system, Windows and a leading cloud platform in Azure, not to mention Minecraft developer Mojang
All of which "could be important to its success in cloud gaming", the CMA said as it gave the two companies five days to submit proposals to address its concerns.
If suitable suggestions are not submitted, the deal will be referred for a detailer phase 2 investigation, where an independent panel would examine the deal in more depth and evaluate whether it is more likely than not that a substantial lessening of competition will occur as a result of the merger.
“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, the CMA’s senior director of mergers.
Microsoft’s head of gaming, Phil Spencer, said that the company would pursue a “principled path”, pointing to previous commitments to making the same version of Call of Duty available on the rival PlayStation console from Sony on the same day the game launches on Xbox and elsewhere.
“We will continue to enable people to play with each other across platforms and across devices. We know players benefit from this approach because we’ve done it with Minecraft, which continues to be available on multiple platforms and has expanded to even more since Mojang joined Microsoft in 2014.
“As we extend our gaming storefront across new devices and platforms, we will make sure that we do so in a manner that protects the ability of developers to choose how to distribute their games.”