The UK’s competition watchdog will conduct an in-depth probe into Microsoft’s (MSFT) $68.7bn (£59.5bn/€69bn) deal to acquire video game publisher Activision Blizzard amid antitrust concerns.
The Competition and Markets Authority (CMA) said that Microsoft had five days to propose remedies, making it the first global antitrust regulator to sound the alarm over the transaction.
The watchdog is concerned that if the deal is completed, it could substantially lessen competition in gaming consoles, multi-game subscription and cloud gaming services. The CMA also warned that the acquisition could harm rivals by refusing them access to Activision Blizzard games or providing access on worse terms.
As well as being one of the world’s biggest computer companies, Microsoft is a key player in the gaming market, most notably through its Xbox range.
Activision Blizzard is best known as the maker of popular gaming series such as Call Of Duty and World Of Warcraft.
Sorcha O’Carroll, senior director of mergers at the CMA, said: “Following our phase one investigation, 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.
“If our current concerns are not addressed, we plan to explore this deal in an in-depth phase two investigation to reach a decision that works in the interests of UK gamers and businesses.”
A phase two investigation can last for more than seven months and raises the prospect that it could be blocked completely.
Brad Smith, Microsoft's president and vice chairman, said: “We’re ready to work with the CMA on next steps and address any of its concerns.
"Sony (SONY), as the industry leader, says it is worried about Call of Duty, but we’ve said we are committed to making the same game available on the same day on both Xbox and PlayStation. We want people to have more access to games, not less.”
Phase two investigations allow an independent panel of experts to look in more depth at the risks identified in phase one.