Microsoft’s blockbuster deal with Call of Duty maker Activision got a step closer to completion today after the UK competition watchdog said a revised version of the deal addressed its concerns, adding that it “opens the door” to being cleared.
The Competition and Markets Authority had blocked a previous version of the $69 billion merger, citing Microsoft’s already-dominant position in cloud gaming services. Microsoft came back with a fresh proposal, under which an independent company, Ubisoft Entertainment, would manage Activision’s cloud streaming rights.
In a statement the CMA said: “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.
“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.
“While the restructured deal is materially different to the previous transaction and substantially addresses most concerns, 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.
“To address these concerns, Microsoft has offered remedies to ensure that the terms of the sale of Activision’s rights to Ubisoft are enforceable by the CMA. The CMA has provisionally concluded that this additional protection should resolve those residual concerns.”
The regulator said it had now opened a consultation on Microsoft’s proposed remedies, which will run until 6 October.
Microsoft Vice Chair and President Brad Smith said: “We are encouraged by this positive development in the CMA’s review process. 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.”
Smith previously lashed out at the competition regulator’s earlier decision to reject the deal, which had been approved by regulators in the EU and Japan, describing it as “the darkest day in our four decades in Britain."
“The strong message that the CMA has sent...will discourage innovation and investment in the United Kingdom,” he said.
CMA CEO Sarah Cardell said: “Microsoft has now substantially restructured the deal, taking the necessary steps to address our original concerns.
“It would have been far better, though, if Microsoft had put forward this restructure during our original investigation. 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.”
Activision CEO Bobby Kotick said: “This is a significant milestone for the merger and a testament to our solutions-oriented work with regulators. I remain optimistic as we continue the journey toward completion and am very grateful to each of you for your dedication and focus throughout this process.”