Microsoft is facing an in-depth investigation by the competition watchdog over concerns that its $69bn (£60bn) takeover of one of the world’s largest videogame companies will allow it to crush rivals and push up prices.
The tech behemoth’s deal to buy Call of Duty maker Activision Blizzard is set to be referred for a so-called Phase 2 investigation by the Competition and Markets Authority (CMA), raising the prospect that it could be blocked completely.
Microsoft makes the X-Box game console series, and the CMA is concerned that its acquisition of Activision Blizzard’s brands – which also include World of Warcraft and Candy Crush – would unfairly harm rival Sony, maker of the PlayStation.
The regulator has given Microsoft and Activision Blizzard a week to assuage its concerns about the deal before launching a Phase 2 review, which can last for more than seven months.
The regulator said: “Having full control over this powerful catalogue, especially in light of Microsoft’s already strong position in gaming consoles, operating systems and cloud infrastructure, could result in Microsoft harming consumers by impairing Sony’s ability to compete.”
The CMA added it believed that Microsoft could make Call of Duty exclusive to Xbox or its Game Pass service.
Microsoft has denied that it would cut Sony off from the Call of Duty series, which is one of the best selling videogame franchises of all time, generating $30bn in total revenues and selling 425m copies.
Brad Smith, Microsoft’s chief executive, said: “We’re ready to work with the CMA on next steps and address any of its concerns.
“Sony, as the industry leader, says it is worried about Call of Duty, but we’ve said we are committed to making the same game available on the same day on both Xbox and PlayStation. We want people to have more access to games, not less.”
Sony has warned regulators that it would be impossible for it to develop a competitor to Call of Duty if it was cut off from the title. In a filing with regulators in Brazil, Sony said: “Call of Duty has been the top-selling game for nearly every year over the past decade, and for its genre, it’s overwhelmingly the best-selling game. It is synonymous with first-person shooters and essentially defines that category.”
The CMA said that Microsoft had previously switched games it had acquired into console exclusives for its Xbox hardware. It is also concerned the deal could concentrate power in Microsoft’s online cloud gaming offerings.
Sorcha O’Carroll, senior director of mergers at the CMA, said: “We are concerned that Microsoft could use its control over popular games like Call of Duty and World of Warcraft post-merger to harm rivals, including recent and future rivals in multi-game subscription services and cloud gaming.”