Microsoft’s Activision Blizzard acquisition wins tentative green light in the UK
After blocking Microsoft Corp.’s acquisition of Activision Blizzard Inc. earlier this year, the U.K.’s antitrust regulator has tentatively determined the deal can go ahead.
The Competition and Markets Authority, or CMA, announced its decision today. The regulator’s reversal comes a few weeks after Microsoft proposed a series of major changes to the acquisition terms. Those changes, the CMA stated, “substantially address” its concerns about the deal.
Microsoft announced its plans last January to buy Activision Blizzard, a publicly traded video game developer. The $68.7 billion deal is poised to establish Microsoft’s as the world’s third-largest video game company by revenue. Soon after its announcement, the transaction began drawing scrutiny from the CMA and other antitrust regulators.
The CMA blocked the acquisition this past April. The regulator’s decision was driven mainly by concerns that the deal could hurt the cloud gaming market.
Microsoft competes in the cloud gaming market with a service called Xbox Cloud Gaming. The CMA was concerned that, in the event the Activision Blizzard deal goes through, Microsoft could make the former company’s content available exclusively on its own cloud gaming service. That would hurt rival services’ ability to compete.
Before the CMA blocked the deal in April, Microsoft proposed a series of antitrust commitments designed to address the regulator’s concerns. Those commitments were rejected as insufficient. Last month, Microsoft proposed a series of broader changes to the acquisition’s terms, which is the move that led to today’s tentative green light from the CMA.
The crux of Microsoft’s new proposal is to transfer the cloud streaming rights for Activision Blizzard games to rival Ubisoft Entertainment SA. The licensing deal covers not only Activision Blizzard’s existing titles but also all the new content it will develop in the next 15 years. Under the proposed agreement, Ubisoft would license the games to both Microsoft and competing cloud gaming providers.
“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,” the CMA stated today.
Microsoft’s revised acquisition terms also address a number of other concerns that the regulator has raised. In particular, the updated deal requires the company to make Activision Blizzard games available on operating systems other than Windows. If it receives a request to do so, Microsoft will also have to provide support for console emulators, software tools that enable PC users to run video games originally developed for a console.
The CMA has identified a number of areas for improvement in Microsoft’s revised deal. According to the regulator, some of the transaction terms involved in the sale of Activision Blizzard’s cloud streaming rights to Ubisoft “could be circumvented, terminated, or not enforced.” To address those concerns, Microsoft is proposing an update to the deal terms that the CMA has already tentatively accepted.
The regulator will carry out a review of the revised transaction through Oct. 6. Under Microsoft’s agreement with Activision Blizzard, the acquisition must be completed by Oct. 18.
“We are encouraged by this positive development in the CMA’s review process,” Microsoft Vice Chair and President Brad Smith said in a statement. “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 Oct. 18 deadline.”
A message from John Furrier, co-founder of SiliconANGLE:
Your vote of support is important to us and it helps us keep the content FREE.
One click below supports our mission to provide free, deep, and relevant content.
Join the community that includes more than 15,000 #CubeAlumni experts, including Amazon.com CEO Andy Jassy, Dell Technologies founder and CEO Michael Dell, Intel CEO Pat Gelsinger, and many more luminaries and experts.