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Following approval from the US and the EU, the CMA is the last major competition authority to withhold approval for Microsoft’s $69bn Activision bid.
Microsoft is now closer than ever to acquiring Activision Blizzard as the UK Competition and Markets Authority (CMA) says an amended deal addresses its competition concerns.
In a statement published today (22 September), the CMA said that by agreeing to sell the cloud gaming rights of Activision to Ubisoft, Microsoft “substantially addresses” previous concerns around stifling innovation and competition and “opens the door” to the deal being cleared.
The CMA found in February, following an in-depth investigation of the $69bn acquisition deal, that it could harm 45m gamers in the country, particularly those who “cannot afford or do not want to buy an expensive gaming console or gaming PC”.
According to the watchdog, Microsoft already accounts for an estimated 60 to 70pc of global cloud gaming services. It also has an advantage over competitors by virtue of its ownership of Xbox, Windows and global cloud computing infrastructure such as Azure.
“Buying one of the world’s most important game publishers would reinforce this strong position and substantially reduce the competition that Microsoft would otherwise face in the cloud gaming market in the UK,” the CMA said in a statement at the time.
Microsoft then submitted an altered proposal to meet the regulator’s needs, which the CMA has investigated.
The new deal
Under the new deal, 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.
“The prior sale of the cloud gaming rights will establish Ubisoft as a key supplier of content to cloud gaming services, replicating the role that Activision would have played in the market as an independent player,” the CMA wrote in its statement today.
“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.”
Microsoft first announced plans to acquire the gaming company behind Call of Duty and Candy Crush in January last year. It was estimated at the time that the acquisition would make Microsoft the world’s third-largest video game company by revenue after Tencent and Sony.
While regulators poured in with concerns, the UK CMA is now the last major competition authority to give Microsoft a green signal.
In July, a US judge ruled against an attempted block by the Federal Trade Commission. Earlier in the summer, the EU gave Microsoft and Activision its approval to go ahead with the deal following an in-depth review.
“It would have been far better, though, if Microsoft had put forward this restructure during our original investigation,” said Sarah Cardell, CEO of the CMA.
“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.”
Though positive news for the acquisition, 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”. Microsoft has “offered remedies” to ensure that all terms of the sale to Ubisoft are “enforceable by the CMA”, which seems to have satisfied the regulator.
The CMA has now opened a consultation until 6 October to consider Microsoft’s proposed remedies.
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