Referenews

The regulator offered a list of potential remedies that might be hard for Microsoft to swallow, including divesting Activision’s publishing unit, which owns the studios that make its blockbuster Call of Duty franchise.

It said another option would be selling off the Blizzard Entertainment business in addition to Activision Publishing. Blizzard is the creator of hit series such as World of Warcraft, Overwatch, Diablo and Starcraft.

Less-dramatic options could include enforceable commitments by Microsoft to make Call of Duty games available to rival console makers such as

Sony Group Corp.

at the same time as they are released on Xbox machines. Microsoft has said publicly that it was willing to offer commitments to rivals regarding equal access to Call of Duty.

Microsoft and Activision could appeal a decision by the CMA if it were to go against the deal in April, a process that could go on for months or years. Meanwhile, the deal faces scrutiny in the U.S. and in the European Union as well. Since the U.K.’s divorce from the EU, the country’s CMA has asserted itself in a number of high-profile deals. That new global role, and the U.K.’s big presence in the gaming and entertainment business, has made British approval an important test in the gauntlet of regulatory approvals Microsoft and Activision need around the world to consummate the deal.

The CMA, which opened its initial, formal probe of the deal in July followed by the launch of an in-depth investigation in September, published its provisional findings on Wednesday, along with a list of possible steps that could be taken to address its concerns.

Microsoft said Wednesday that it is committed to offering effective and easily enforceable solutions that address the CMA’s concerns. It said its commitment to granting long-term, equal access to games in Activision’s flagship Call of Duty series on rival platforms “preserves the deal’s benefits to gamers and developers and increases competition in the market.”

Activision said it hoped to help the CMA better understand the industry ahead of the regulator’s final decision.

Antitrust lawyers say the CMA tends to prefer structural solutions, like asset sales, when faced with potential competition concerns, over commitments from companies to behave a certain way. So-called behavioral commitments, such as Microsoft’s promise to make Call of Duty available on equal terms for other platform operators, can be difficult to enforce compared with structural changes, some of those lawyers said.

Breaking up Activision’s business would be like taking it back to the early 2000s, before the company merged with Blizzard in a deal with Blizzard’s then-owner, French conglomerate

Vivendi SA

. That deal buttressed Activision’s Call of Duty franchise with other series such as World of Warcraft and Starcraft. The CMA didn’t specifically mention King, the Activision unit and maker of Candy Crush and other mobile games. Activision Blizzard acquired that game maker in 2016 for $5.9 billion.

The CMA said its investigation into the deal included hearings with leaders at Microsoft and Activision, site visits and an analysis of more than three million internal documents from the companies to understand their views on the market. The regulator also said it commissioned an independent survey of 40,000 U.K. gamers and gathered evidence from a range of other console makers, game publishers and cloud-gaming service providers.

The CMA’s provisional ruling comes after it said in December that it received an overwhelming majority of emails from the public in favor of the transaction after requesting people’s input between Oct. 14 and Oct. 28. The antitrust watchdog said about three-quarters of 2,100 responses it received were in support of the transaction and about one-quarter were opposed. 

Other major regulators are also examining the deal. 

In November, the Federal Trade Commission sued Microsoft to block the deal, saying it is illegal because it would give the software giant the ability to control how consumers beyond users of its own Xbox consoles and subscription services access Activision’s games. The company could raise prices for people who don’t use Microsoft’s hardware to access the games, or even cut off access entirely, the FTC said.

Microsoft has said the deal would be fundamentally good for gamers, developers and competition. The company has also said it isn’t the videogame industry’s top console manufacturer or software developer. 

A hearing in the FTC’s administrative court is scheduled for August, though a settlement could be reached before then.

Separately, the European Union’s antitrust regulator launched its own in-depth investigation into the deal in November, and last year extended its deadline for a final decision on the merger to April 11.

Microsoft officials have repeatedly expressed confidence in closing the transaction, which the company has valued at $68.7 billion after adjusting for Activision’s net cash. Earlier this month, Microsoft Chief Executive

Satya Nadella

defended it at the World Economic Forum’s annual event in Davos, Switzerland.

“Being a No. 4 player trying to add some content and create more opportunity for more publishers, more gamers to be able to enjoy—I mean if you believe in competition, you should believe in this deal,” Mr. Nadella said. “I hope the competition authorities get focused more on competition and that would be a good day.”

Write to Sarah E. Needleman at Sarah.Needleman@wsj.com and Kim Mackrael at kim.mackrael@wsj.com