In a significant development, British competition regulators have granted preliminary approval to Microsoft’s (NASDAQ:MSFT) restructured $69 billion acquisition of video game maker Activision Blizzard, removing a critical global obstacle and paving the way for one of the largest tech deals in history.
The Competition and Markets Authority (CMA) stated that the revised proposal has “substantially addressed previous concerns” regarding potential competition issues in the rapidly growing cloud gaming sector. Cloud gaming allows players to stream games to devices like tablets and smartphones, eliminating the need for costly consoles and gaming computers.
The CMA noted that the updated offer has the potential to clear the deal, although some concerns persist. Microsoft has proposed solutions that the watchdog has provisionally determined will address these concerns, and regulators are currently seeking feedback from “interested parties” before making a final decision.
This announcement signifies that the U.K. regulator is close to reversing its earlier decision to block Microsoft from acquiring the company behind popular gaming franchises such as Call of Duty and World of Warcraft.
CMA CEO Sarah Cardell emphasized the watchdog’s consistent stance throughout the process: “This merger could only go ahead if competition, innovation, and choice in cloud gaming were preserved.” She added, “In response to our original prohibition, Microsoft has now substantially restructured the deal, taking the necessary steps to address our original concerns.”
Since the deal was initially announced in January 2022, Microsoft has obtained approvals from antitrust authorities in more than 40 countries. Crucially, it received the green light from the European Union, covering 27 nations, after agreeing to allow users and cloud gaming platforms to stream its titles without paying royalties for a decade.
However, Microsoft encountered obstacles in the United States and the United Kingdom, where regulators were concerned that the acquisition of Activision would stifle competition and negatively impact gamers, especially those using Sony’s PlayStation console instead of Microsoft’s Xbox.
Although the U.S. Federal Trade Commission opposed the transaction, it lost a legal battle to block it, effectively clearing the path for the deal to proceed. The FTC’s appeal of that decision is still pending.
To address the concerns of British regulators, Microsoft and Activision extended the original July deadline for closing the deal to mid-October. The CMA then suspended its original decision and initiated a fresh investigation into the revised proposal.
Microsoft President Brad Smith expressed optimism about the U.K. watchdog’s review process, saying, “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 October 18 deadline.”
Activision CEO Bobby Kotick hailed the preliminary approval as “a significant milestone for the merger and a testament to our solutions-oriented work with regulators.” Under the restructured deal, Microsoft will sell cloud streaming rights for all current and new Activision games released over the next 15 years outside of the EU and three other European countries to French game studio Ubisoft Entertainment.
Featured Image: Pexels @ Salvatore De Lellis
Author Stephanie Bédard-Châteauneuf 
