The British competition regulator says that Microsoft’s $69 billion acquisition of gaming giant Activision Blizzard could harm competition in the U.K. gaming market, and that it could move to block the deal.
The Competition and Markets Authority published a provisional decision on the deal on Wednesday, stating that the takeover raises competition concerns and may result in higher prices, fewer choices and less innovation.
In a notice of possible remedies sent to both parties, the CMA said it may require Microsoft to:
sell the business associated with its popular Call of Duty franchise
divest the Activision segment of Activision Blizzard
divest both Activision and Blizzard
terminate the deal
Microsoft and Activision Blizzard have until Feb. 22 to respond. The CMA is set to issue a final decision on April 26. The regulator opened an in-depth probe into the deal on Sept. 1.
The CMA is concerned that the Activision deal could strengthen Microsoft’s position in the cloud gaming market, adding Call of Duty and other lucrative titles to its cloud-based Xbox Game Pass platform.
Cloud gaming, which allows gamers to play games over the internet on devices other than a console, is still in its infancy and not yet a mass-market technology.
The deal would also boost Microsoft’s console business, the CMA said, adding that Microsoft would find it “commercially beneficial” to make Activision games exclusive to its Xbox hardware or available on PlayStation “under materially worse conditions.”
This “could substantially reduce the competition between Xbox and PlayStation in the UK, in turn harming UK gamers,” the watchdog noted.
Activision Blizzard shares were down 2% on Wednesday following the CMA announcement. Microsoft shares, meanwhile, were trading 2% higher on the back of an announcement about the tech giant’s artificial intelligence advancements.
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