Microsoft has been dealt a major blow to its hopes of completing the proposed $69 billion takeover of Call of Duty publisher Activision Blizzard, with the UK’s Competition and Markets Authority (CMA) saying that the deal “could harm UK gamers”.

The CMA has published the provisional findings of its investigation into the deal which has been conducted over the last five months. The investigation analysed over three million internal documents from the two businesses, commissioned an independent survey of UK gamers and gathered evidence from other players in the market for their view of the deal.

While much of the public outcry over the takeover has been surrounding IP – ranging from World of Warcraft to the aforementioned Call of Duty – the biggest contention raised by the CMA is surrounding competition in the supply of cloud gaming services.

The report notes: “Microsoft already accounts for an estimated 60-70% of global cloud gaming services and also has other important strengths in cloud gaming from owning Xbox, the leading PC operating system (Windows) and a global cloud computing infrastructure (Azure and Xbox Cloud Gaming).”

It adds that “Microsoft would find it commercially beneficial to make Activision’s games exclusive to its own cloud gaming service (or only available on other services under materially worse conditions),” and concludes that “buying one of the world’s most important game publishers would reinforce this strong position and substantially reduce the competition that Microsoft would otherwise face in the cloud gaming market in the UK.”

The CMA said that this aspect could harm gamers “who cannot afford or do not want to buy an expensive gaming console or gaming PC.”

The report does note the concerns surrounding IP saying that “Microsoft would find it commercially beneficial to make Activision’s games exclusive to its own consoles”. The Xbox maker has pledged to continue supporting games like Call of Duty on non-Microsoft consoles, and can point to the cultural dominance of Minecraft since its developer Mojang was acquired by Microsoft for $2.5 billion in 2014.

Commenting on the findings, Martin Coleman, chair of the independent panel of experts conducting the Phase 2 investigation, said: “It’s been estimated that there are around 45 million gamers in the UK, and people in the UK spend more on gaming than any other form of entertainment including music, movies, TV, and books. Strong competition between Xbox and PlayStation has defined the console gaming market over the last 20 years. Exciting new developments in cloud gaming are giving gamers even more choice.

“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.”

National Technology News has reached out to Microsoft and Activision Blizzard for comment.

Share Story: