UK Approves Microsoft's Acquisition of Activision in Long-awaited Deal

Microsoft is one step closer to finalizing its acquisition of Activision Blizzard as the UK Competition and Markets Authority (CMA) has approved an amended deal that addresses their competition concerns. The CMA announced today that Microsoft's agreement to sell the cloud gaming rights of Activision to Ubisoft has "substantially addressed" previous worries about stifling innovation and competition. This development paves the way for the deal to be cleared.

Earlier this year, the CMA completed an in-depth investigation into the $69 billion acquisition deal and found that it could potentially harm 45 million gamers in the UK, particularly those who cannot afford or choose not to purchase expensive gaming consoles or gaming PCs. The watchdog noted that Microsoft already commands 60 to 70% of the global cloud gaming services market, giving it an advantage over competitors due to its ownership of Xbox, Windows, and global cloud computing infrastructure like Azure.

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According to the CMA, purchasing one of the world's leading game publishers would reinforce Microsoft's dominant position and significantly reduce the competition it would face in the UK's cloud gaming market. However, after Microsoft submitted an altered proposal to address the regulator's concerns, the CMA initiated another investigation into the acquisition.

The Revised Deal

Under the revised deal, Microsoft will not acquire the cloud gaming rights held by Activision. Instead, those rights will be sold to Ubisoft, an independent third party, prior to the completion of the deal. This move establishes Ubisoft as a key supplier of content for cloud gaming services, mirroring the role that Activision would have played had it remained an independent player in the market.

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With this change, Microsoft will no longer have control over the cloud gaming rights for Activision's content. This means that Microsoft will not be able to restrict access to Activision's key content on its own cloud gaming service or withhold those games from its competitors.

Microsoft initially announced its plans to acquire Activision, the company behind popular games like Call of Duty and Candy Crush, in January of last year. If the deal goes through, Microsoft is expected to become the world's third-largest video game company by revenue, trailing only Tencent and Sony.

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While the US and the EU have already given their approval for the acquisition, the CMA's clearance is a significant step towards the deal's completion. Commenting on the latest development, Sarah Cardell, CEO of the CMA, emphasized that it would have been more preferable if Microsoft had proposed this restructure earlier in the investigation process. She highlighted the costs, uncertainty, and delays that can arise when a viable remedy option is not presented at the appropriate time.