Britain’s competition watchdog moved closer to potentially blocking Microsoft’s planned $69bn (£56bn) takeover of Call of Duty game company Activision.
The UK’s Competition and Markets Authority (CMA) said in an interim ruling that the proposed tie-up could lead to higher prices, less choice and less innovation for UK gamers.
big deal, First announced over a year agoDesigned to support the Xbox manufacturer microsoft position in the lucrative gaming market.
Subscriptions have become a top priority for big tech companies as traditional areas of growth, such as ad sales, have become less reliable.
But Microsoft’s strategy has been met with a series of complaints from rivals including Sony and regulators around the world.
The US Federal Trade Commission (FTC) has already blocked the deal on similar competition grounds, with a hearing due in August.
The CMA launched an in-depth investigation last September after deciding that further work on its implications was necessary.
The regulator said on Wednesday it had given both parties the opportunity to address their concerns through possible remedies before reaching a final decision.
This will be announced by April 26, the statement said.
It explained: “The CMA tentatively found that reducing competition by restricting access to Activision games on other platforms could significantly reduce competition between the UK Xbox and (Sony) PlayStation, to the detriment of UK gamers.
Xbox and PlayStation are currently in close competition with each other, and access to the most important content such as CoD is an important part of that competition.
“Reducing competition between Microsoft and Sony could result in all gamers seeing higher prices, shorter range, lower quality and poorer service on consoles over time.”
Martin Coleman, chair of the CMA’s research group, added: “There are an estimated 45 million gamers in the UK, with Britons spending more on games than on any other form of entertainment, including music, film, TV and books.
“The fierce competition between Xbox and PlayStation has defined the console gaming market for the past 20 years.
“Exciting new developments in cloud gaming are giving gamers even more options.
“Our job is to ensure UK gamers are not caught in the crossfire of global deals that, over time, could harm competition and lead to higher prices, less choice or less innovation.
“We tentatively found that might be the case here.”
Microsoft and Activision have until February 22 to submit their responses – including proposed remedies to the CMA.
It has resisted criticism from regulators, but has signed a 10-year commitment to supply the popular first-person shooter series Call of Duty to Nintendo and Sony platforms.
It has yet to respond to the CMA’s interim findings.