Microsoft’s $69B Activision merger on track for green light

The UK’s antitrust watchdog announced today that it has provisionally accepted Microsoft’s new terms for its $69bn acquisition of Call of Duty developer Activision-Blizzard, renewing hopes that the biggest-ever gaming deal will go ahead.

The Competition and Markets Authority (CMA) blocked the merger in April after fears that Microsoft — which already accounts for an estimated 60% to 70% of the global cloud gaming market — would further increase its advantage by making some of the world’s most popular games exclusively available on its own platforms.

The two firms submitted a revised merger agreement to the CMA last month, aimed at mitigating the watchdog’s concerns that the takeover would reduce innovation and choices for gamers. Under the restructured offer, Microsoft agreed to sell some of its gaming rights to French video game publisher Ubisoft — a move that the watchdog believes will keep competition in cloud gaming open for years to come.   

“This is a new and substantially different deal, which keeps the cloud distribution of these important games in the hands of a strong independent supplier, Ubisoft, rather than under the control of Microsoft,” said Colin Raftery of the CMA. 

Microsoft head Brad Smith said the firm will continue to work towards winning final approval to close the deal. “We are encouraged by this positive development in the CMA’s review process. We presented solutions that we believe fully address the CMA’s remaining concerns related to cloud game streaming,” he noted.  

While the watchdog is happy with the restructured deal, it nevertheless criticised Microsoft for not taking the necessary steps from the outset. 

“It would have been far better if Microsoft had put forward this restructure during our original investigation,” said CEO Sarah Cardell. “This case illustrates the costs, 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.”

The CMA has now opened a consultation on the revisions, which closes on October 6.  It will make its final decision on the merger by October 18.