Microsoft-Activision deal may 'substantially' lessen competition, UK regulator finds
Lukas Schulze

The U.K.'s antitrust regulatory agency provisionally ruled on Wednesday that Microsoft's (NASDAQ:MSFT) proposed $69B deal to buy Activision Blizzard (NASDAQ:ATVI) would cause a "substantial lessening of competition" in gaming consoles and cloud gaming services in the U.K.
The Competition and Markets Authority, or CMA, found both Microsoft's (MSFT) Xbox and Sony's PlayStation (SONY) compete closely with one another and that Activision's Call of Duty video game series is important to both consoles.
"The evidence suggests that, after the Merger, Microsoft would find it commercially beneficial to make [Call of Duty] exclusive to Xbox or available on Xbox on materially better terms than on PlayStation," the CMA wrote in its statement. "We provisionally found that this would substantially reduce competition in gaming consoles to the detriment of gamersâXbox and PlayStation gamers alikeâwhich could result in higher prices, reduced range, lower quality, worse service, and/or reduced innovation."
With regards to cloud gaming services, the CMA said both Call of Duty and World of Warcraft are important for these services and that Microsoft (MSFT) would find it "commercially beneficial" to make its titles exclusive to its cloud gaming services, Xbox Game Pass or PC Game Pass.
"Given we have provisionally found that Microsoft already has a strong position in this market through its ownership of Xbox, a global cloud computing service, and the leading PC operating system, 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," the CMA added.
The CMA added that parties have until March 1 to comment on the provisional findings. 
Microsoft (MSFT) Corporate Vice President and Deputy General Counsel Rima Alaily told Seeking Alpha the company is committed to offering "effective and easily enforceable solutions" that address the CMA's concerns.
"Our commitment to grant long term 100% equal access to Call of Duty to Sony, Nintendo, Steam and others preserves the dealâs benefits to gamers and developers and increases competition in the market," Alaily said in an emailed statement.
Microsoft (MSFT) shares were up 1.5% to $271.57 in premarket trading while Activision Blizzard (ATVI) fell around 3%.
The CMA first opened up an inquiry into the deal in July 2022 to see if it had an impact on the U.K. gaming market.
The Microsoft (MSFT)-Activision (ATVI) deal has come under intense scrutiny across the globe, including in the U.S. by the Federal Trade Commission.
Brazil approved the transaction in October while Chinese game developers were said to give positive feedback on the deal last week.
On Tuesday, Activision Blizzard (ATVI) CEO Bobby Kotick said he thinks the U.K. will become Death Valley if its antitrust agency moves to block Microsoft's (MSFT) planned $69B acquisition of the video-game maker.
Updated to include Microsoft's response.