Analysts at Morgan Stanley said Tuesday that a Microsoft app store on the iPhone would represent “the biggest potential threat” to Apple‘s App Store.

Microsoft could launch a new app store for games as early as next year if regulators approve the company’s $75 billion acquisition of Activision Blizzard, Phil Spencer, head of Microsoft Gaming, told the Financial Times in an interview Monday.

Under the European Union’s Digital Markets Act, Apple and Google will likely have to expand access to app stores owned by other companies on their mobile devices. The new rules are expected to come into effect next March, which provides a window for competitors like Microsoft to enter the fray.

“If we took a ‘worst case’ view of the world and said the potential Microsoft app store could take all EU gaming revenue from the Apple App Store – given the focus of the DMA is just in Europe, for now – that would equate to 8% of App Store revenue, 2% of Apple Services revenue, and a ~1% hit to Apple company-level revenue and EPS,” the analysts said. Apple generated $20.77 billion in services revenue during its fiscal first quarter of 2023.

But even if Microsoft is able to successfully acquire Activision Blizzard and launch an app store, Morgan Stanley analysts are not convinced it will be cause for concern at Apple.

In 2022, analysts found that Microsoft and Activision Blizzard had an “immaterial impact” on Apple’s company-level revenue, as they accounted for less than 1% of total Apple Services revenue combined.

“We estimate the impact of a potential Microsoft App Store on the iPhone would be limited to <3% of App Store revenue and <0.5% of EPS, but it still represents the biggest potential threat to the App Store today,” they wrote in a Tuesday note.

The analysts added that many unknowns still remain about whether Microsoft can successfully close its deal. Regulators in the U.S., the U.K. and Europe have raised concerns about what the acquisition of Activision Blizzard could mean for competition.

Morgan Stanley analysts also found that fewer than 30% of Apple users would be willing to buy apps outside of the company’s App Store. Even so, they said Microsoft’s app store could prove to be a true competitor with time.

“MSFT’s strong brand and tech leadership still represents a potential long-term threat to keep watching,” the analysts wrote.

— CNBC’s Michael Bloom contributed to this report.

Correction: Michael Bloom of CNBC contributed to this report. An earlier version misstated his name.