Microsoft's $69 billion Call of Duty deal 'could hurt gamers'

The acquisition risks stifling competition in the growing cloud gaming market between Xbox and PlayStation, UK watchdog says

An image from 'Call of Duty: Vanguard'. Photo: Activision

Microsoft’s planned purchase of “Call of Duty” creator Activision Blizzard could hurt gamers in terms of fewer choices and higher prices, the Britain’s antitrust regulator has warned.

The $69-billion deal risks stifling competition in the growing cloud gaming market between Xbox and Sony’s PlayStation, the Competition and Markets Authority (CMA) said.

The blockbuster deal also could hurt British gamers by “weakening the important rivalry” between Microsoft’s Xbox system and Sony’s rival PlayStation machines, the watchdog said in a provisional report.

“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,” said Martin Coleman, chairman of the independent expert panel that carried out the investigation.

“We have provisionally found that this may be the case here.”

The CMA’s investigation found the deal could strengthen Microsoft’s position in the growing cloud gaming market, “harming UK gamers who cannot afford expensive consoles”.

In cloud gaming, players stream games on mobile phones and hand-held devices they already own.

The all-cash deal, which is set to be the largest in the history of the tech industry, is facing opposition from Sony and pushback from US and European regulators because it would give Microsoft control of popular game franchises including Call of Duty, World of Warcraft and Candy Crush.

Activision's flagship Call of Duty franchise was important in driving competition between consoles, and Microsoft could benefit by making the game exclusive to Xbox, or only available on PlayStation under materially worse conditions. the report said.

Microsoft, which has pledged to keep Call of Duty on PlayStation, said it would address the CMA's concerns.

“Our commitment to grant long-term 100 per cent equal access to Call of Duty to Sony, Nintendo, Steam and others preserves the deal's benefits to gamers and developers and increases competition in the market,” corporate vice president Rima Alaily said.

The company stressed that equal meant parity on content, pricing, features, quality and playability for 10 years.

Activision Blizzard said the CMA's findings were provisional and both parties had a chance to respond before it issues a final report by April 26.

“We hope between now and April we will be able to help the CMA better understand our industry to ensure they can achieve their stated mandate to promote an environment where people can be confident they are getting great choices and fair deals, (and) where competitive, fair-dealing business can innovate and thrive,” a representative said.

Chief executive Bobby Kotick said Activision looks forward to continuing constructive talks with regulators in Britain and the EU, where a separate investigation is under way.

“We are also confident that the law — and the facts — are on our side,” he said.

The UK antitrust investigation is now set to drag on for a few more months, dashing Microsoft’s hopes that a speedy and favourable outcome could help it resolve a lawsuit brought by the US Federal Trade Commission.

The FTC has sought to block the deal, arguing that the merger could violate antitrust laws by suppressing competitors to Xbox and its growing game subscription business.

Microsoft told the FTC’s administrative judge in January that it was working to resolve the UK investigation, as well as the EU probe, and hoped to bring back proposed remedies to US regulators.