Britain takes aim at Microsoft's $69bn 'Call of Duty' deal

The Competition and Markets Authority said the deal could result in higher prices, fewer choices and less innovation for millions of players as well as stifling competition in cloud gaming

The Competition and Markets Authority said 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 UK placed another hurdle in the way of Microsoft's $69bn (€64bn) mega-purchase of "Call of Duty" games maker Activision Blizzard, saying it could harm gamers by weakening the rivalry between Xbox and Sony's PlayStation.

The Competition and Markets Authority, or CMA, said the biggest-ever deal in gaming, announced a year ago, could result in higher prices, fewer choices and less innovation for millions of players as well as stifling competition in cloud gaming.

It said 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 deal is also being scrutinised in the EU and the US, where the CMA showed its willingness to take on big tech in 2021 when it blocked Facebook-owner Meta's acquisition of Giphy.

In December, the US moved to block the deal, citing Microsoft's record of hoarding valuable gaming content. The US Federal Trade Commission has set a hearing before a judge for August this year.

The EU is also preparing a statement of objections about the deal, sources told Reuters last month.

Alex Haffner, competition partner at law firm Fladgate, said the CMA's comments suggested that structural commitments, such as asset sales, might be the only way to allay its concerns.

"This would obviously call into question the strategic rationale for the deal," Mr Haffner said. "Microsoft faces a stiff challenge to get the global regulatory green light."

Microsoft has pledged to keep "Call of Duty" on PlayStation. The popularity of the first-person shooter franchise is undimmed nearly two decades after launch, with the latest instalment achieving $1bn sales in its first 10 days in October.

But the US tech giant has said the deal is about more than "Call of Duty". It has said buying the company that also makes "Overwatch" and "Candy Crush" would charge its growth in mobile, PC, and cloud gaming, as well as consoles, helping it compete with the likes of Tencent as well as Sony.

Sony, however, has led opposition to the deal, saying last year that it was "bad for competition, bad for the gaming industry and bad for gamers themselves." 

Reuters