The UK’s competition regulator has raised concerns about Microsoft’s $68.7bn (£59.6bn) deal to buy the Call of Duty publisher, Activision Blizzard, and given the two companies five days to offer solutions.
The Competition and Markets Authority (CMA) warned that the Xbox owner’s proposed takeover of the company behind popular titles including World of Warcraft and Candy Crush, which would be the biggest ever gaming industry merger, “could substantially lessen competition in gaming consoles, multi-game subscription services, and cloud gaming services”.
The CMA added: “Microsoft already has a leading gaming console (Xbox), a leading cloud platform (Azure), and the leading PC operating system (Windows OS), all of which could be important to its success in cloud gaming.”
The two companies now have five working days to submit proposals to address its concerns, and if suitable suggestions are not submitted, the deal will be referred for a phase 2 investigation, allowing an independent panel of experts to examine the risks in greater detail.
“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,” said Sorcha O’Carroll, the CMA’s senior director of mergers.
In response, Phil Spencer, Microsoft’s head of gaming, promised that the company would pursue a “principled path”.
Spencer said: “As we’ve said before, we are committed to making the same version of Call of Duty available on PlayStation on the same day the game launches elsewhere.
“We will continue to enable people to play with each other across platforms and across devices. We know players benefit from this approach because we’ve done it with Minecraft, which continues to be available on multiple platforms and has expanded to even more since [the Minecraft developer] Mojang joined Microsoft in 2014.
“As we extend our gaming storefront across new devices and platforms, we will make sure that we do so in a manner that protects the ability of developers to choose how to distribute their games.”
At the same time, however, Spencer also confirmed that the Activision Blizzard games Overwatch, Diablo and Call of Duty would be on its Netflix-for-games subscription service Game Pass.
Spencer said Microsoft’s pitch to consumers is that the acquisition is a result of the company’s decision to “embrace choice” through the creation of Game Pass and by bringing “more games to mobile platforms”, again largely though Game Pass and its associated cloud streaming service.
Both Microsoft and Sony are ploughing billions into filling out the catalogues of their subscription services.
The PlayStation owner has launched a competitor to Game Pass, PlayStation Plus Premium and spent $3.7bn on acquiring the Destiny developer, Bungie.
Microsoft has already bought ZeniMax, which makes the Skyrim, Fallout and Doom series, for $7.5bn.
The bidding war has funnelled cash to independent developers and publishers, but also raised fears of an inevitable bust to come once the boom times are over.
