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CMA provisionally approves Microsoft’s Activision Blizzard acquisition

UK regulator is satisfied with sale of cloud rights to Ubisoft
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It’s a good morning for Microsoft and Xbox, as the UK’s Competition and Market Authority (CMA) has provisionally approved of the company’s proposed acquisition of Activision Blizzard.

The CMA initially refused to approve the deal, arguing that Microsoft would become too powerful a force in the cloud gaming segment, but came under pressure to reevaluate its decision after the European Union gave its assent and the United States’ Federal Trade Commission (FTC) was handed a loss at court in its attempt to stop the merger.

The UK regular now stated in a press release that “the sale of Activision’s cloud gaming rights to Ubisoft substantially addresses previous concerns and opens the door to the deal being cleared.”

Xbox and Activision Blizzard logos in white on top of a collage of game characters from Activision Blizzard games.

Things are looking better than ever for Microsoft's acqusition of Activision Blizzard.

Before the merger with Microsoft, which now seems unstoppable, Activision Blizzard will sell the global cloud gaming rights to its titles (the rights for the European Economic Area excluded) to Ubisoft for a period of 15 years, according to the CMA’s decision document. Basically, Microsoft has agreed to make a small divestment in this area in exchange for keeping the rest of the company it's taking over intact.

“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.

The regulator reasoned:

“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. 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 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 shortcoming with the previous remedies package.”

The CMA said that it had some “residual concerns” about ways Microsoft could circumvent this deal, but that the company had already offered suitable remedies to address these, making the conditions enforceable by the CMA. The regulator has opened a consultation on these remedies open until October 6, 2023, after the conclusion of which it wants to make a final decision. As of now, though, Microsoft seems to have cleared the largest remaining hurdle. 

Microsoft's Brad Smith wrote that the company was "encouraged by this positive development in the CMA’s review process."

While the FTC has not given up its legal fight just yet, it’s an uphill battle for the US regulator.