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The big picture: As antitrust authorities in multiple countries continue their inspection of Microsoft's unprecedented acquisition of Activision Blizzard, UK regulators have expressed deep concerns. While much talk surrounding the deal has focused on Call of Duty and consoles, the British antitrust probe highlights its possible effects on the growing cloud gaming and subscription markets.
On Thursday, the United Kingdom's Competition and Markets Authority (CMA) expressed worry that Microsoft's purchase of Activision Blizzard could harm competition in multiple gaming markets. If Microsoft doesn't submit a proposal to address the CMA's concerns by September 8, the organization will move its investigation into a second phase and examine the deal with greater scrutiny.
Under Phase 2, the CMA would appoint an independent group to more closely study the likelihood that the acquisition could harm competition. The third party would also scrutinize both companies' internal records.
After beginning its initial probe in July, the CMA has voiced concerns similar to those Sony published in response to a Brazilian inquiry on the deal. A primary issue is that Microsoft could leverage Call of Duty — one of the biggest franchises in the industry — to its advantage against Sony's PlayStation console.
Microsoft again stated its intentions to continue releasing Call of Duty games on PlayStation in a Thursday update on its plans for Activision Blizzard. In that post, Xbox boss Phil Spencer confirmed that users would see Activision Blizzard games like Call of Duty, Overwatch, and Diablo on Game Pass and Xbox Cloud if the deal goes through. Microsoft's subscription and cloud services are also primary sources of the CMA's warning.
The UK regulator thinks that keeping some of the biggest PC gaming franchises on Game Pass and Xbox Cloud could make it too difficult for any other subscription or cloud service startup to compete. If regulators approve the acquisition, players might be able to near-instantly play games like Call of Duty Warzone or Overwatch 2 on Xbox Cloud after a simple Google search, whether on a PC or a mobile device.
Previously, Microsoft admitted to Brazil's Administrative Council for Economic Defense that PlayStations handily outsell Xboxes. The company also claimed that Sony fears the new business model subscriptions and cloud gaming present. Sony's PlayStation Plus subscription includes cloud gaming. However, unlike Microsoft, Sony doesn't let subscribers stream all of its latest hot titles, nor does it feature cloud gaming through web browsers.