Microsoft's Activision Blizzard deal faces more UK scrutiny amid concerns

Microsoft's plan to buy video game company Activision Blizzard faced a potential setback on Thursday after British regulators said their antitrust inquiry needed to take a closer look at the deal

Microsoft's plan to buy video game company Activision Blizzard faced a potential setback on Thursday after British regulators said their antitrust inquiry needed to take a closer look at the blockbuster deal after identifying competition concerns.

The Competition and Markets Authority said it was worried the USD 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 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.

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.

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. Until now, only Saudi Arabia had announced its approval for the USD 69 billion deal.

Competition watchdogs from New Zealand to Brazil are still examining the purchase, as are US 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.