UK regulator provisionally clears Microsoft’s $69B Activision acquisition

The UK’s Competition and Market’s Authority (CMA) has declared that Microsoft has addressed the concerns it had about the software giant’s $68.7 billion acquisition of gaming studio Activision Blizzard, clearing the way for the deal to go ahead.

In April, the CMA blocked Microsoft from making the acquisition over concerns the deal could “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.”

Although Microsoft had submitted a proposal to address some of its concerns before the CMA reached its decision in April, that proposal ultimately contained a number of significant shortcomings. These included a failure to sufficiently open up to providers who might wish to offer versions of games on PC operating systems other than Windows, and not taking into consideration different cloud gaming service business models.

Microsoft appealed the decision, taking the case to a Competition Appeal Tribunal. However, after the US Federal Trade Commissin lost its legal challenge against the acquisition, the trial was paused to allow both parties in the UK to try and resolve the issue. In August, Microsoft submitted a restructured transaction for the CMA to review.

In contrast to the original deal, Microsoft will no longer control cloud gaming rights for Activision’s content, removing its ability to limit access to Activision’s key content or withhold those games from rivals. Furthermore, Microsoft will not purchase the cloud gaming rights held by Activision, which will instead be sold to an independent third party, Ubisoft, before the deal is completed.

“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 CMA said in a statement on Friday.

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 concern that had been previously been raised by the regulator.

“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,” said Sarah Cardell, CEO of the CMA, in comments posted alongside the announcement.

“Microsoft has now substantially restructured the deal, taking the necessary steps to address our original concerns,” she said, adding that it would have been far better however if Microsoft had put forward this restructure during the CMA’s original investigation.

The CMA has invited interested parties to comment on the new agreement before October 6