By Paul Sandle and Radhika Anilkumar
LONDON (Reuters) -Britain’s antitrust regulator said Microsoft Corp’s $69 billion acquisition of “Call of Duty” maker Activision Blizzard could harm competition in gaming consoles, subscription services and cloud gaming, and it needed to be investigated in depth.
The Competition and Markets Authority (CMA) said on Thursday the deal, the largest ever in gaming, could damage the industry if Microsoft refused to give competitors access to Activision’s best-selling games.
“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,” the CMA said.
Microsoft, with Xbox, and its rivals Sony and Nintendo have led the console market for 20 years, with limited entries from new rivals, the CMA said.
Microsoft and Activision said they would continue to cooperate with the CMA.
“We want people to have more access to games, not less,” Microsoft President and Vice Chair Brad Smith said.
“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,” he said.
Activision said it still expected the deal to close in Microsoft’s financial year to end-June 2023.
Shares in Microsoft were trading down 1% after the announcement, which it had expected. Activision was up 0.5%.
The two companies have until Sept. 8 to submit proposals to address the CMA’s concerns.
CLOUD GAMES
The deal, which was announced in January, will require approval in the United States as well as other major jurisdictions including the European Union and China.
Reuters previously reported that Microsoft would pay a $3 billion break-fee if the deal falls through, according to a source familiar with the matter, suggesting the company was confident of winning antitrust approval.
The CMA said Microsoft was well positioned to succeed in cloud gaming, given it had a leading cloud platform in Azure and the leading PC operating system in Windows OS, as well as Xbox.
It said these strengths in combination with Activision’s games could damage competition in the nascent market for cloud gaming services.
Microsoft said in a blog on Thursday that it was committed to expanding choice for gamers through both its Game Pass subscription service and by bringing more games to mobile.
It said thorough reviews by regulators would show that the combination of Microsoft and Activision Blizzard will benefit the industry and players.
(Reporting by Radhika Anilkumar in Bengaluru and Paul Sandle in London,additional reporting by Sinchita Mitra;Editing by Arun Koyyur, David Goodman and Emelia Sithole-Matarise)