Microsoft's planned multibillion-dollar acquisition of Activision Blizzard moved closer to fulfillment after UK authorities indicated on Friday, September 22, that the revised proposal for the merger is likely to be approved.
The UK Competition and Markets Authority (CMA) released a statement saying that Microsoft's suggested changes might help keep the emerging cloud gaming market competitive, including the transfer of Activision's cloud gaming rights to rival Ubisoft.
"Under that new deal, Microsoft will not purchase the cloud gaming rights held by Activision, which will instead be sold to an independent third party, Ubisoft Entertainment SA (Ubisoft), before the deal is completed," the press release reads.
Does the New Proposal Satisfy Regulators?
Microsoft made the announcement of its intended acquisition in early 2022, but the UK's competition authority halted the transaction in April of that year.
Concerns were raised by regulators that Microsoft may use its monopoly power over Activision's popular games like Call of Duty, World of Warcraft, and others to keep them from being made available on competing gaming platforms.
Newer cloud-based services, which let players access game content via the internet without the need to download game files to their devices, raised significant concerns about the deal's implications. Microsoft, Nvidia, and Sony are just a few of the companies that provide such features.
According to the CMA, Microsoft's proposal would enable Ubisoft to offer Activision games for sale via different channels other than only regular retail stores. The watchdog added that the revised contract effectively replaces the role Activision would have played in the market if it had remained independent.
CNN said Microsoft has expressed optimism about the CMA's assessment process after this latest favorable turn.
"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," Microsoft President Brad Smith stated.
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The Microsoft-Activision Merger
As the creator of Overwatch and Candy Crush, Activision sees a bright future with Microsoft after receiving this preliminary clearance. Its stock price increased by about 2% in early trade.
After Microsoft agreed in May to license Activision's games to other platforms, the same solutions that Britain had rejected, the European Union approved the transaction.
The arrangement has been opposed not just by the EU but also by the US Federal Trade Commission (FTC). The FTC is challenging a federal judge's July ruling that the purchase may proceed.
While the loss of the cloud gaming rights is certainly not in Microsoft's best interests, according to Sophie Lund-Yates, an equity analyst at Hargreaves Lansdown, it is essential collateral if the transaction is to be approved. "This looks to be the final bump in the road," she stated.
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