The UK’s CMA Has Provisionally Approved Microsoft’s Acquisition of Activision Blizzard

abk

The end may finally be in sight for the long-running saga that has been Microsoft’s proposed acquisition of Activision Blizzard.

The UK’s Competition and Markets Authority (CMA) has now provisionally approved the restructured deal placed before them by Microsoft in order to gain their approval on the deal. The CMA up until this point had been the last major regulator still standing in the way of the deal after the EU granted approval and Microsoft defeated the FTC in court.

The CMA had blocked the original deal that Microsoft had put forward to them, citing concerns over the Cloud Gaming market, a decision that Microsoft was appealing with the Competition Appeal Tribunal (CAT). However, after their court victory over the FTC in July, both the CMA and Microsoft asked for the CAT to halt Microsoft’s appeal so that both parties could resume discussion on the best way forward to gain the approval of the CMA.

This led to a restructured deal being put forward to the CMA where Microsoft has agreed to sell the cloud gaming rights for Activision Blizzard titles to Ubisoft for a period of 15 years. It now looks like this restructured deal is acceptable to the CMA.

The CMA considers that the restructured deal makes important changes that substantially address the concerns it set out in relation to the original transaction earlier this year.

In particular, the sale of Activision’s cloud streaming rights to Ubisoft will prevent this important content – including games such as Call of Duty, Overwatch, and World of Warcraft – from coming under the control of Microsoft in relation to cloud gaming. The CMA originally found that Microsoft already has a strong position in cloud gaming services and could have used its control over Activision content to stifle competition and reinforce this position. The new deal instead results in the cloud streaming rights for Activision’s games being transferred to an independent player, Ubisoft, maintaining open competition as the market for cloud gaming develops over the coming years.

While the restructured deal is materially different to the previous transaction and substantially addresses most concerns, 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.

The CMA

Of course, the CMA did also state that they had residual concerns in regards to the restructured deal but that Microsoft had come forward with remedies that will address these, such as:

  • Ubisoft can not Microsoft an exclusive licence for the cloud streaming of Activision Blizzard titles
  • Ubisoft can not give Microsoft preferential pricing or treatment in regards to the cloud streaming of Activision Blizzard titles
  • Microsoft must offer Activision Blizzard titles to Ubisoft at a price that is no higher than the wholesale retail price for digital, PC and console versions of the same content.
  • Microsoft must ensure that the cloud versions of Activision Blizzard titles are similar to their non-cloud streaming counterparts in terms of features, content and performance.
  • At the request of Ubisoft, Microsoft must port Activision Blizzard titles to non-Windows operating systems. This work must be carried out by Microsoft and they can only charge Ubisoft reasonable costs for the work involved

All of the remedies offered will be enforceable by the CMA.


Shortly after the CMA released their provisional approval of the deal, Microsoft Vice Chair and President Brad Smith released a statement on X:

The CMA has now set a deadline of October 6th for comments on the merger, including on the new remedies that Microsoft has proposed.

It does certainly feel that we are now on the home straight in order for this deal to close. Microsoft seem to have met the CMA’s concerns with agreeable remedies and unless another curve ball is thrown late into the game, it looks very much like this deal is set to close in early October.


Advertisement

Lee Reid

Scottish video game enthusiast who is very passionate and a big believer in cloud gaming. Also loves to chat about video games.

Leave a Reply