Microsoft’s long-standing proposal to acquire Activision Blizzard for $69 million is set to go through after a revised deal was put to the UK regulator blocking the deal.
The Competition and Markets Authority had 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.
Having won approval for the deal in the United States and European Union, Microsoft initially hit out at the CMA, claiming that its block showed “the UK is clearly closed for business”.
However it changed to a more conciliatory approach and returned to the CMA with a revised offer which suggested that the streaming rights of all Activision Blizzard games released in the next 15 years – including Call of Duty, Overwatch and World of Warcraft – would be sold to French gaming company Ubisoft rather than Microsoft.
The CMA said today that the move substantially addresses previous concerns and ‘opens the door to the deal being cleared’.
It is now consulting on the remedies before making a final decision.
“In contrast to the original deal, Microsoft will no longer control cloud gaming rights for Activision’s content, so would not be in a position to limit access to Activision’s key content to its own cloud gaming service or to withhold those games from rivals,” said the CMA.
“Unlike the remedies the CMA previously rejected, Ubisoft will be free to offer Activision’s games both directly to consumers and to all cloud gaming service providers however it chooses, including for buy-to-play or multigame subscription services, or any new model for providing content that might emerge as the market develops.
“The deal with Ubisoft also requires Microsoft to port Activision games to operating systems other than Windows and support game emulators when requested, addressing the other main shortcoming with the previous remedies package.”
It added: “The CMA has limited residual concerns that certain provisions in the sale of Activision’s cloud streaming rights to Ubisoft could be circumvented, terminated, or not enforced.
“To address these concerns, Microsoft has offered remedies to ensure that the terms of the sale of Activision’s rights to Ubisoft are enforceable by the CMA. The CMA has provisionally concluded that this additional protection should resolve those residual concerns.”
Sarah Cardell, CEO of the CMA, added: “The CMA’s position has been consistent throughout – this merger could only go ahead if competition, innovation, and choice in cloud gaming was preserved. In response to our original prohibition, Microsoft has now substantially restructured the deal, taking the necessary steps to address our original concerns.
“It would have been far better, though, if Microsoft had put forward this restructure during our original investigation. This case illustrates the costs, uncertainty and delay that parties can incur if a credible and effective remedy option exists but is not put on the table at the right time.”