The U.K. Competition and Markets Authority has finished its first pass examining Microsoft's proposed acquisition of Activision Blizzard and flagged the deal for a second, more in-depth review.
The CMA's report, published Thursday, determined the deal would likely be "giving rise to a realistic prospect of a substantial lessening of competition in gaming consoles, multi-game subscription services and cloud gaming services."
The CMA's senior directors of mergers, Sorcha O'Carroll, said the body was "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 in cloud gaming."
Sony and Activision Blizzard are currently locked into a deal making PlayStation the primary platform for Call of Duty for the next few years, but once that deal runs its course, Microsoft could make one of the biggest franchises in modern gaming Xbox-exclusive. Indeed, several Activision Blizzard properties were announced as coming to Game Pass earlier this week.
The CMA highlighted Starfield and The Elder Scrolls 6 as examples of Microsoft making major releases console-exclusive after acquisitions (though Microsoft has been cagey about those plans as they relate to the Elder Scrolls 6).
Sony is believed to Microsoft's main competitor, as the CMA found its content, target audience and console technology overlap more than Nintendo's does with either company.
"We're ready to work with the CMA on next steps and address any of its concerns," said Microsoft president Brad Smith in a statement. "Sony, as the industry leader, says it is worried about Call of Duty, but we've said we are committed to make the same game available on the day on both Xbox and PlayStation. We want people to have more access to games, not less."
Activision Blizzard CEO Bobby Kotick issued a statement of his own, writing, "As we said from the outset, this is a long process. With the number of government approvals required, we still believe the deal is most likely to close in Microsoft's fiscal year ending June of next year. We are fortunate to have already received approvals from a couple of countries, and the process with all of the regulators is generally moving along as we expected."
Kotick said he would initiate town halls at Activision Blizzard to keep employees abreast of the progress of the acquisition.