UK Regulator Grants Preliminary Approval To Microsoft’s Activision Blizzard Acquisition

Microsoft proposed a deal last month to Ubisoft to get Activision Blizzard’s game streaming rights for 15 years. Microsoft took this step to ensure that the CMA approved its purchase of Activision Blizzard after previously blocking it due to cloud gaming concerns. Microsoft’s new Ubisoft acquisition has led to the CMA granting preliminary approval one month after it was first blocked by regulators. 

The CMA says it has “identified limited residual concerns with the new deal” but that Microsoft has put forward remedies (see: Ubisoft’s role) that the CMA “has provisionally concluded should address these issues.” CMA will consult on these remedies prior to making an official final decision before the deadline of October 18. 

“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,” the CMA writes in a new article. “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. Microsoft’s position is strong in cloud gaming, and Microsoft had the ability to use Activision content as leverage and a way to reinforce its position.

As the market develops in cloud gaming, the new deal transfers Activision’s cloud streaming rights to Ubisoft. It maintains open competition. The restructured transaction is substantially different from the prior deal and addresses the majority of concerns. However, there are still some concerns about the possibility that the provisions in Activision’s sale to Ubisoft’s cloud gaming rights could be circumvented or terminated.

Microsoft offers remedies in order to satisfy these concerns and ensure the CMA can enforce the conditions of Activision’s sale to Ubisoft. CMA’s provisional conclusion is that these additional safeguards should address any remaining concerns. CMA now has a consultative process until [October 6]Microsoft’s remedies” 

CMA CEO Sarah Cardell said the agency was consistent right from the start, noting this merger could only proceed if “competition, innovation and choice were preserved in cloud gaming.” Cardell says, “It would have been better, though, if Microsoft had put forward this restructure during our original investigation,” adding that this case illustrates the “cost, 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.” 

Brad Smith, Microsoft’s vice president and President of Twitter, stated the following after the CMA gave preliminary approval. 

We are pleased with this development. The CMA has expressed concerns about cloud-based game streaming. We have presented solutions we feel fully address these concerns. 

Activision Blizzard’s CEO Bobby Kotick sent the following message to the company on Monday: 

Team, I would like to give you an update regarding our merger plans with Microsoft. CMA (UK regulatory authority) has given a preliminary nod to our planned merger with Microsoft. This was based upon the Microsoft solutions presented with their new merger request. The approval of our merger is dependent on this. CMA’s next task is to collect feedback from other parties, and then make a final determination. 

This transaction, as I announced when the deal was made public, will allow us to accelerate our plans for gaming’s future. It will also enable us better serve our users. Microsoft acknowledges our commitment to excellence and creativity independence, which has served us for 30 years. Their resources, tools, and technology will give us more opportunities to make better games. It is an important milestone in the merging of our companies and it shows how we work together to find solutions. I continue to be optimistic about the completion of this merger and thank you all for your commitment and hard work. 

As the regulators complete their work, I’ll keep you informed on our progress toward our anticipated closing. “With gratitude, Bobby.” 

For a quick recap of what’s been happening, you can read the story on how Microsoft announced it would be acquiring Activision Blizzard, for an incredible $69 Billion, then the CMA blocked the deal in the U.K. because they were concerned about cloud gaming. Then, you can read how a California judge denied the FTC’s request for a preliminary injunction this summer. Finally, learn about Microsoft’s plans to reach a satisfactory agreement with the CMA. You can also read Microsoft’s proposal for a Ubisoft partnership. 

What are your thoughts on Ubisoft streaming Activision Blizzard in the UK games? Tell us what you think in the comments!