Microsoft says it is willing to modify its $69 billion takeover of Activision Blizzard to satisfy the UK’s Competition and Markets Authority.

The tech giant – which has just won approval for the deal in the United States after getting the green light from the European Union – had said previously that it would “aggressively” appeal the CMA’s block and that it showed “the UK is clearly closed for business and discourages technology innovation and investment in the UK”.

In a marked change of direction, Microsoft president Brad Smith said it would work to make the deal “acceptable to the CMA”. The organisations have agreed to pause their legal battle.

Microsoft has just won a US federal court ruling against the Federal Trade Commission, meaning the CMA is the last regulator preventing the Xbox manufacturer from acquiring Activision Blizzard.

The CMA has concerns that the deal – originally agreed in January 2022 – would alter the future of the fast-growing cloud gaming market, leading to reduced innovation and less choice for UK gamers over the years to come.

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“After today’s court decision in the US, our focus now turns back to the UK. While we ultimately disagree with the CMA’s concerns, we are considering how the transaction might be modified in order to address those concerns in a way that is acceptable to the CMA,” said Smith. 

“In order to prioritise work on these proposals, Microsoft and Activision have agreed with the CMA that a stay of the litigation in the UK would be in the public interest and the parties have made a joint submission to the Competition Appeal Tribunal to this effect.”

Should Microsoft fail to close the acquisition by 18th July, it will have to pay Activision a $3bn termination fee.

“We stand ready to consider any proposals from Microsoft to restructure the transaction in a way that would address the concerns set out in our final report,” stated the CMA.

Prior to the block, Microsoft pledged to continue to make games such as Call of Duty available on Sony’s PlayStation for 10 years, a commitment that failed to convince the CMA but which EU regulators said “fully address the competition concerns identified by the Commission and represent a significant improvement for cloud game streaming compared to the current situation”.

Microsoft accounts for an estimated 60-70% of global cloud gaming services and has other important strengths in cloud gaming from owning Xbox, the leading PC operating system (Windows) and a global cloud computing infrastructure (Azure and Xbox Cloud Gaming).

The CMA said there was evidence that Microsoft would find it commercially beneficial to make Activision’s games – including Call of Duty, Overwatch and World of Warcraft – exclusive to its own cloud gaming service.

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