Microsoft Corp’s restructured $69 billion acquisition of Activision Blizzard Inc. takes one giant step closer to fruition after Britain’s antitrust regulator said the revised deal offer appeared to address its concerns. The Competition and Markets Authority “opens the door” to clearing the biggest-ever gaming deal, allowing it to proceed if the U.S. tech giant can convince European authorities that it will not monopolize the nascent cloud gaming market, the CMA said on Friday. The watchdog said the changes Microsoft offered, including selling Activision’s cloud streaming rights to French video game publisher Ubisoft Entertainment SA, a competitor, would help keep the industry competitive.
The CMA’s initial provisional ruling blocked the acquisition in April, concerned that the U.S. tech giant would gain too much control of the nascent market for online gaming and threaten other rival services such as Netflix Inc’s subscription streaming model for video games. It was a rare U-turn by the watchdog, which had earlier favored the deal. The CMA also dropped its concerns that the deal would raise game prices. The deal, first announced in early 2022, has been plagued with regulatory challenges. It has faced several delays and reportedly faces a potential delay until late June at the earliest, with a possible extension to September.
Initially, the company proposed offering a series of concessions to ease the CMA’s concerns. These included granting royalty-free licenses for Activision’s games to other platforms and offering free multiplayer access to the company’s Xbox consoles to gamers who do not have a subscription. But the CMA said these remedies were unlikely to prevent a dominant position in cloud gaming, and it opened a new phase 1 investigation of the deal.
This new phase will examine whether Microsoft’s new deal offers sufficient protections to address the CMA’s concerns and, if so, will allow it to close the acquisition. The watchdog will consult on the restructured deal for a month before deciding.
If the restructured deal is cleared, it will be the third time the CMA has given Microsoft approval to buy the video game maker. The CMA approved the takeover in May after the U.S. Federal Trade Commission failed to stop it through a court challenge, and a U.S. judge cleared the deal in July.
The UK CMA’s new opening of the case could add months to a timeline already stretched to October, but the watchdog is looking to clear the deal before the end of its fiscal year on Nov. 30, according to a statement from both companies.
The latest developments put the deal on track to be completed by mid-2022, the original target date for the transaction. But it is still being determined how likely that will be if the EU decides to take on the case and if it finds similar concerns over the impact of the deal on the nascent cloud gaming market.
