Microsoft-Activision: UK looks poised to clear restructured deal

22.09.2023 - 09:07 / techcrunch.com

The UK’s competition watchdog has signalled it’s preparing to greenlight a restructured proposal for Microsoft to acquire Activision. In an update on its ongoing assessment today it said the deal “makes important changes that substantially address the concerns it set out in relation to the original transaction earlier this year”.

The Competition and Markets Authority (CMA) blocked the $68.7 billion gaming mega-merger back in April — on the grounds that it would substantially weaken competition in the cloud gaming market — but last month opened a fresh investigation into a restructured deal proposal Microsoft had submitted for review, while also simultaneously confirming its April decision to block the original merger proposal.

The restructured deal proposes the sale of Activision’s cloud gaming rights to a rival games maker, Ubisoft — which the CMA has now suggested “substantially addresses previous concerns and opens the door to the deal being cleared”.

“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,” it wrote. “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.”

The regulator does still have “limited residual concerns” — related to whether certain provisions in the sale of Activision’s cloud streaming rights to Ubisoft “could be circumvented, terminated, or not enforced”. But it said Microsoft has offered remedies aimed at ensuring the terms of the sale of Activision’s rights to Ubisoft are enforceable by the regulator — and the CMA has provisionally concluded these should resolve its residual concerns.

This is still not the last step, though. It has now opened a consultation, until October 6, on Microsoft’s proposed remedies.

Commenting in a statement, Colin Raftery, senior director of mergers and Phase 1 decision maker at the CMA, said:

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.

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