UK competition regulator warns Microsoft’s Activision deal could harm millions of gamers

(CNN) — Microsoft’s $69 billion purchase of Activision Blizzard could harm competition by letting Microsoft restrict Activision’s video games to proprietary platforms such as Xbox, UK officials said Wednesday, in the latest challenge to the tech giant’s blockbuster acquisition.

The UK’s competition regulator said the proposed deal, which would make Microsoft the world’s third-largest video game publisher, could hurt tens of millions of gamers in the country by leading to higher prices or fewer choices.

The provisional finding by the UK Competition and Markets Authority is another sign of growing opposition to the deal by antitrust regulators worldwide. In December, the US Federal Trade Commission sued to block the acquisition over similar claims, and the European Union is also evaluating the deal.

The mounting scrutiny reflects how policymakers are refocusing attention on a company that once faced historic antitrust allegations decades ago but has largely avoided criticisms in more recent years targeting its peers including Amazon, Apple, Meta and Google.

As a result of the deal, Microsoft could seek to weaponize popular Activision franchises such as "Call of Duty" by making them exclusive to platforms Microsoft controls, the UK CMA said, adding that just a handful of titles on the market "play an important role in driving competition between consoles," including Xbox and Sony’s PlayStation.

In addition, the CMA said the same economic incentives would encourage Microsoft to make the games exclusive to its own cloud gaming platform, a nascent market. Cloud gaming services grant players access to video games without the need for downloading the games to a local PC or console.

Microsoft has said that it is willing to make "Call of Duty" available to competing platforms for a period of 10 years 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," Microsoft’s deputy general counsel, Rima Alaily, said in a statement Wednesday.

In a separate statement, Activision said the finds are "provisional" and "both parties have a chance to respond."

"We hope between now and April we will be able to help the CMA better understand our industry to ensure they can achieve their stated mandate to promote an environment where people can be confident they are getting great choices and fair deals, where competitive, fair-dealing business can innovate and thrive, and where the whole UK economy can grow productively and sustainably," Activision said in the statement.

As part of Wednesday’s findings, the CMA said Microsoft could potentially resolve the competitive concerns by spinning off the "Call of Duty" franchise, or by spinning off the business units Activision and Blizzard, which respectively oversee "Call of Duty" and another major property, "World of Warcraft."

The recommendations reflect an in-depth, second-stage investigation into the deal that was launched last fall after an initial probe concluded in September that the acquisition raised competitive concerns.

The CMA set a deadline of March 1 for public comments in response to its latest findings. It will issue a final report by April 26.

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