Microsoft's Activision Blizzard deal faces more UK scrutiny

FILE - The Activision Blizzard Booth is shown on June 13, 2013, during the Electronic Entertainment Expo in Los Angeles. Microsofts plan to buy video game giant Activision Blizzard for $68.7 billion could have major effects on the gaming industry, transforming the Xbox maker into something like a Netflix for video games by giving it control of many more popular titles. But to get to the next level, Microsoft must first survive a barrage of government inquiries from various countries. An upcoming decision from the United Kingdom to close or escalate its antitrust probe is expected Thursday, Sept. 1, 2022. (AP Photo/Jae C. Hong, File) (Jae C. Hong, Copyright 2019 The Associated Press. All rights reserved.)

LONDON – Microsoft’s plan to buy video game company Activision Blizzard faced a potential setback Thursday after British antitrust regulators demanded concessions from both companies to ease competition concerns about the blockbuster deal.

The Competition and Markets Authority said it was worried the $69 billion deal would hurt rivals by restricting their access to Activision Blizzard games. It also worried that the combined company would stifle competition in the emerging cloud gaming market.

The authority gave both companies five days to come up with proposals to address its concerns, otherwise it would escalate its investigation with more scrutiny.

The all-cash deal is set to be the largest in the history of the tech industry. It would give Microsoft, maker of the Xbox console and gaming system, control of popular game franchises such as Call of Duty, World of Warcraft and Candy Crush.

The watchdog had opened an initial inquiry in July to assess whether the deal would result in a “substantial lessening of competition” in the United Kingdom.

“Following our Phase 1 investigation, 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," the watchdog's senior director of mergers, Sorcha O’Carroll, said in press statement.

Microsoft President Brad Smith said the company is “ready to work with the CMA on next steps and address any of its concerns.”

Competition regulators around the world are subjecting the transaction, which was announced in January, to a barrage of scrutiny. So far only Saudi Arabia has given approval for the deal.

Watchdogs from New Zealand to Brazil are still examining the purchase, as are U.S. regulators emboldened by President Joe Biden to strengthen their enforcement of antitrust laws.

The stepped-up scrutiny comes amid a growing sense that past reviews of Big Tech mergers were too lax — such as when Facebook bought Instagram in 2012 and WhatsApp in 2014.