Microsoft and Activision Blizzard’s merger report must be completed by the UK CMA by April 26.

Activision Blizzard’s historic sale to Microsoft has encountered yet another difficulty. It does appear promising, according to the UK Competition and Markets Authority’s (CMA) recent publication of its preliminary findings about the deal.

Together with the EU Commission, the UK CMA started a thorough inquiry into the planned transaction five months ago. The UK antitrust authority stated in its assessment that the agreement could lessen competition and “result in all gamers experiencing higher pricing, reduced selection, inferior quality, and even worse service in gaming consoles over time.”

Microsoft’s decision to make Call of Duty and other Activision brands limited to console and cloud gaming services, according to the UK CMA, could reduce competition.

The UK CMA stated that “the CMA provisionally found that a limited number of significant titles, particularly Call of Duty (CoD), Activision’s flagship game, play an important role in fostering competition between systems.” Microsoft would currently find it commercially advantageous to make Activision’s games exclusive to its own consoles (or only available on PlayStation under materially worse conditions), according to evidence that is currently available to the CMA, including information on how Microsoft measures the value of customers in the normal course of business.

It continues, “The CMA’s provisional findings reflect that this strategy, of purchasing gaming firms and making their content exclusively available on Microsoft’s platforms, has been utilised by Microsoft following multiple prior acquisitions of games studios.”

The argument put forth by the UK CMA refers to Microsoft’s earlier purchase of Zenimax. Following Microsoft’s acquisition of Bethesda’s parent business, it was revealed that upcoming IPs like Redfall and Starfield will only be available on Microsoft platforms. Before the agreement, Bethesda released its bestselling games on a variety of platforms, including those in the Elder Scrolls and Fallout series.

The combination “may affect the future of gaming,” according to the antitrust commission, and it might restrict the development of the new cloud gaming service market. Its findings suggest that if the merger were to fail, intense market competition may actually improve and lower the cost of cloud gaming.

One of the potential remedies put out by the UK watchdog was “prohibition of the merger, divestment of a portion of Activision’s business, or behavioural pledges by the Parties.” According to the suggested remedies, Call of Duty should be excluded from the agreement or at the very least, the IP should be sold to a different party.

After the EU Commission and the US Federal Trade Commission, the UK CMA is the third regulatory authority to oppose the agreement. To prevent the merger, the US FTC filed a lawsuit in a US court. Microsoft and Activision Blizzard received a protest letter from the EU Commission last week.

The UK CMA has until April 26, 2023, to complete its analysis of the Microsoft-Activision Blizzard combination.