By Paul Sandle and Radhika Anilkumar
LONDON (Reuters) – UK antitrust watchdog says Microsoft Corporation (NASDAQ: MSFT) with 69 $100 million acquisition of Call of Duty maker Activision Blizzard (NASDAQ: ATVI ) could hurt consoles, subscription services and cloud gaming The competition needs to be in depth.
The Competition and Markets Authority (CMA) said Thursday that the deal could hurt the industry if Microsoft refuses to give rivals access to Activision’s best-selling games.
“We are concerned that Microsoft could use its grip on popular games like Call of Duty and World of Warcraft to hurt competitors after the merger, including near-term and future in multi-game subscription services competitors, and cloud gaming,” the CMA said.
Microsoft vs. Xbox and its competitors Sony (NYSE Code: SONY) and Nintendo have been leading the console market for 20 years, with new competition Opponents have limited entries, the CMA said.
Microsoft and Activision said they will continue to work with the CMA.
“We want people to have more access to games, not less,” said Brad Smith, president and vice chairman of Microsoft.
“As an industry leader, Sony has expressed concerns about Call of Duty, but we have indicated that we are committed to having both Xbox and PlayStation on the same day,” he said.
Activision said it still expects the deal to close within Microsoft’s fiscal year ending in June 2023.
Shares of Microsoft fell 1% after the announcement, as it expected. Activision rose 0.5%.
Both companies have until September 8 to submit proposals to address the CMA’s concerns.
CLOUD GAMES
The deal, which was announced in January, will require approvals in the United States and other key jurisdictions including the European Union and China.
Reuters previously reported that Microsoft will pay $3 billion in liquidated damages if the deal falls through, according to people familiar with the matter, indicating the company is confident of winning antitrust approval.
CMA said that Microsoft has a leading cloud platform in cloud gaming and a leading PC operating system in Windows OS and Xbox.
It said these advantages, combined with Activision’s games, could disrupt competition in the emerging cloud gaming services market.
Microsoft said in a blog post Thursday that it is committed to expanding choice for gamers through its Game Pass subscription service and bringing more games to mobile devices scope.
It said a thorough review by regulators would show that the combination of Microsoft and Activision Blizzard would benefit the industry and players.
