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| UK Competition Watchdog Indicates Positive Outlook for Microsoft's Revised Activision Blizzard Deal |
The United Kingdom's competition watchdog, the Competition Markets Authority (CMA), has indicated that Microsoft's revised offer to acquire Activision Blizzard, the maker of Call of Duty, has the potential to gain regulatory approval.
The CMA expressed satisfaction with the updated deal, suggesting that it addresses the concerns it had previously raised. Notably, Microsoft's new proposal excludes the acquisition of cloud gaming rights held by Activision Blizzard.
Originally, Microsoft's $69 billion (£59 billion) bid for Activision Blizzard faced opposition from UK regulators, resulting in its initial blockage. The CMA had reservations about the deal, particularly regarding its potential impact on competition within the UK's cloud gaming sector.
In response to these concerns, Microsoft restructured its offer, which was submitted for the CMA's review last month. In a statement, Sarah Cardell, the CEO of the CMA, reiterated the authority's stance: "The CMA's position has been consistent throughout - this merger could only go ahead if competition, innovation, and choice in cloud gaming were preserved."
A consultation process will be initiated before the final decision on the deal is made.
Microsoft's intention to acquire Activision Blizzard was first announced in January of the previous year and was poised to become the largest deal in the history of the gaming industry. However, it encountered mixed responses from regulators worldwide.
The European Union approved the deal in May, and the U.S. competition watchdog had its request to halt the acquisition denied by an appeals court.
The UK's initial rejection in April was seen as a setback for the government's aspiration to establish the country as a technology leader.
Sarah Cardell remarked, "It would have been far better... 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."
Sony, a major player in the gaming industry, initially opposed the deal out of concern that Microsoft could restrict access to key games on its PlayStation platform.
In the revised offer, Microsoft has agreed to transfer the rights to stream Activision games from the cloud to French video game publisher Ubisoft for a duration of 15 years. This sale to Ubisoft effectively ensures that cloud streaming for popular games like Call of Duty, Overwatch, and World of Warcraft remains independent of Microsoft's control.
The CMA acknowledged that, with additional safeguards in place, this move allows gamers various avenues to access Activision's games, including through cloud-based multi-game subscription services. Although the CMA still has some "limited residual concerns," it views the revised deal as "new and substantially different," ensuring the cloud distribution of these crucial games remains in the hands of a robust independent supplier, Ubisoft, rather than under Microsoft's dominion.
Microsoft remains hopeful that the merger will drive demand for its Xbox console and gaming subscription services. Brad Smith, Microsoft's Vice Chairman and President, expressed optimism, stating, "We presented solutions that we believe fully address the CMA's remaining concerns related to cloud game streaming, and we will continue to work toward earning approval to close prior to the 18 October deadline."
Microsoft anticipates a final decision from the CMA on the revised bid next month, following the closure of the consultation period on October 6th. Approval from the CMA is essential for the deal to proceed on a global scale.
Activision responded positively to the preliminary approval, stating that it was "great news" for its future alongside Microsoft and expressing its commitment to completing the regulatory review process.
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