Microsoft’s acquisition of Activision Blizzard could harm gamers by weakening the rivalry between Xbox and PlayStation, according to a report from the UK’s Competition and Markets Authority.
The regulator said the deal would “pose a significant risk to competition in the gaming industry,” and urged Microsoft to consider a variety of possible remedies before it approves it.
Call of Duty exclusivity
The CMA argues that Xbox’s Call of Duty franchise is crucial in driving the rivalry between the two consoles, and that losing access to it on PlayStation could hurt Sony’s revenues and user base. This is a concern, because Xbox and PlayStation are the leading consoles in Europe and the US.
The CMA also notes that Microsoft could use its ownership of the Activision library to “foreclose” rivals, including Sony, by making it available on its Game Pass service. This is a big concern, as it could hurt competition in multi-game subscription services.
Stimulating cloud gaming
The UK market watchdog also says that the merger could strengthen Microsoft’s position in the growing cloud gaming market. This is a concern, because it could stifle competition in this growing market and harm UK gamers who can’t afford expensive consoles.
Microsoft has responded to the CMA’s findings, and it argues that the merger will benefit gamers by bringing together Activision Blizzard’s most popular games with its own titles. Specifically, it claims that “Microsoft is in a strong position to make Activision’s games profitable by keeping them exclusive to Xbox under materially worse conditions,” which is a valid point.