The UK's Competitions and Markets Authority says that it believes Microsoft buying Activision Blizzard would have a negative impact on gamers.
In a provisional report, the government body found that the deal would the Xbox maker too great an advantage in the space were it to have Call of Duty under its wing. This would result in "higher prices, reduced range, lower quality, worst service and/or reduced innovation. That's on top of anxieties surrounding Activision Blizzard's other IP, such as World of Warcraft, would aid Microsoft's growing cloud gaming ecosystem.
Microsoft and other industry parties are able to respond to these findings by March 1st.
"It’s been estimated that there are around 45 million gamers in the UK, and people in the UK spend more on gaming than any other form of entertainment including music, movies, TV, and books," said Martin Coleman, the chair of the panel of experts conducting the investigation in the deal.
"Strong competition between Xbox and PlayStation has defined the console gaming market over the last 20 years. Exciting new developments in cloud gaming are giving gamers even more choice.
"Our job is to make sure that UK gamers are not caught in the crossfire of global deals that, over time, could damage competition and result in higher prices, fewer choices, or less innovation. We have provisionally found that this may be the case here.
"We have also today sent the companies an explanation of how our concerns might be resolved, inviting their views and any alternative proposals they wish to submit."
Microsoft CVP and deputy general counsel Rima Alaily commented: "We are committed to offering effective and easily enforceable solutions that address the CMA's concerns. Our commitment to grant long term 100 per cent equal access to Call of Duty to Sony, Nintendo, Steam and others preserves the deal’s benefits to gamers and developers and increases competition in the market. 75 per cent of respondents to the CMA‘s public consultation agree that this deal is good for competition in UK gaming."