• The UK’s Competition and Markets Authority has said that Microsoft’s acquisition of Activision Blizzard would threaten competition in the console and cloud gaming market.
• The acquisition could lead to higher prices, fewer choices and less innovation in the gaming sector.
• The CMA notes that Microsoft has in the past made content it acquired from other games studios exclusive to its platforms.

Deals can change. That’s what the UK’s Competition and Markets Authority (CMA) told Microsoft as regards the provisional findings of its investigation [PDF] into the proposed acquisition of publisher Activision Blizzard.

Microsoft has been battling to get this acquisition across the line and now it seems that it has hit a hard roadblock. The CMA said on Wednesday that the acquisition could potentially lead to higher prices, fewer choices and less innovation for gamers in the UK. Furthermore, the authority says, the deal could weaken the rivalry between Xbox and PlayStation.

While Microsoft has tried every trick it can to convince authorities around the world that it would publish games on other platforms, the CMA questioned this.

The authority says that post-merger, Microsoft would find it beneficial to make Activision Blizzard titles exclusive or better on its platforms. We’ve seen this in the past, particularly as regards Destiny where Activision Blizzard’s deals with Sony resulted in exclusive content for PlayStation.

Microsoft could ostensibly do the same here for Call of Duty without removing the game from the PlayStation platform. Hell, Microsoft offers League of Legends players exclusive content when they sign up for Game Pass which can potentially draw in more subscribers as this offer unlocks all Champions in the game among other things.

Why pay Riot Games when you can simply pay Microsoft for access to all Champions and hundreds of free games?

The CMA notes that Microsoft has in the past made content it acquired from other games studios exclusive to its platforms.

In fact, it’s not just PlayStation’s position in the market, the CMA is concerned but cloud gaming as well.

Microsoft holds a large amount of power in the realm of cloud gaming thanks to Xbox’s back catalogue of games and Microsoft’s network of Azure services. While Xbox Cloud Gaming is still in its infancy, Microsoft’s already strong position could upend the market entirely if it were to add Activision Blizzard’s catalogue of titles to its own platform.

“Given we have provisionally found that Microsoft already has a strong position in this market [cloud gaming] through its ownership of Xbox, a global cloud computing service, and the leading PC operating system (OS), we are concerned that even a moderate increment to its strength may be expected to substantially reduce competition in this developing market to the detriment of current and future cloud gaming users,” reads the report.

The authority hasn’t ordered Microsoft to abandon the acquisition as of yet but that could change when it published its final report on 26th April 2023.

One way Microsoft could push the acquisition through as detailed by the CMA is by Activision Blizzard divesting the business associated with Call of Duty or by splitting up Activision and Blizzard.

“Our job is to make sure that UK gamers are not caught in the crossfire of global deals that, over time, could damage competition and result in higher prices, fewer choices, or less innovation. We have provisionally found that this may be the case here,” chair of the independent panel of experts which conducted phase two of the CMA’s investigation, Martin Coleman said in a press release.

We now wait for April to see whether this acquisition is dead in the water or if Microsoft will finally be able to welcome Bobby Kotick and co into its fold.