The UK Competition and Markets Authority (CMA) has officially given provisional approval to Microsoft’s planned acquisition of Activision Blizzard, following months of negotiations, and a significant post-verdict appeal. According to the CMA, solutions offered to concerns around potential domination in the cloud gaming market have been fairly addressed by Microsoft, and for this reason, it is now prepared to approve the deal.
While the ruling handed down by the CMA in September is technically only “provisional” in that it precedes a firm, final ruling to be handed down by 18 October 2023, it is not expected that this approval will be revoked. Consultation over the decision will be sought in the coming weeks, with the final verdict following.
“Earlier this year, the CMA blocked Microsoft from acquiring the whole of Activision due to concerns that the deal would harm competition in cloud gaming in the UK,” the CMA said of its provisional ruling. “After that deal was blocked, Microsoft submitted a restructured transaction in August for the CMA to review.”
“Under that new deal, Microsoft will not purchase the cloud gaming rights held by Activision, which will instead be sold to an independent third party, Ubisoft Entertainment SA (Ubisoft), before the deal is completed … 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.”
Per the CMA, Microsoft has effectively addressed its major concerns around the cloud streaming market, providing a number of remedies that provide tangible, legally-binding, and enforceable solutions to ensure a cloud streaming monopoly is not possible – at least, in the UK.
While the CMA initially rejected Microsoft’s bid to gain approval for its planned acquisition, the regulator now believes the new version of the deal, with caveats included, is substantially different enough to pass muster.
“This is a new and substantially different deal, which keeps the cloud distribution of these important games in the hands of a strong independent supplier, Ubisoft, rather than under the control of Microsoft,” Colin Raftery, senior director of mergers and Phase 1 decision maker at the CMA said.
“With additional protections to make sure that the deal is properly implemented, this will maintain the structure of the market, enabling open competition to continue to shape the development of cloud gaming in the years to come, and giving UK gamers the opportunity to access Activision’s games in many different ways, including through cloud-based multi-game subscription services.”
As the final, major hurdle for Microsoft to jump in its quest to acquire Activision Blizzard, it appears the CMA’s latest decision will be the catalyst for change at the company. With provisional approval heading for its final stages, Microsoft can now plan for acquisition in practical terms, with firm change likely to kick off in October 2023.
Stay tuned for the CMA’s final word on the Activision Blizzard acquisition, and what the next steps are for Microsoft as it prepares to absorb the games library and business of one of the largest video game developers in the world.