Tech and Science

Microsoft relents on game streaming rights to secure UK approval of Activision Blizzard deal


UK competition authorities on Tuesday launched a new probe into Microsoft's revised takeover bid for video game maker Activision Blizzard, marking the final major hurdle in completing one of the biggest deals in tech history.

The Competition and Markets Authority said it has until October 18 to decide whether to approve the deal or turn its preliminary inquiry into an in-depth scrutiny. The companies previously agreed to extend the deadline for the transaction to the same date.

Xbox maker Microsoft has been on the hunt for acquisition of Activision, makers of the popular Call of Duty franchise, since announcing the $69 billion deal in January 2022.

The companies have received approvals from antitrust authorities in 40 countries, including the European Union.

The blockbuster deal faced opposition in the United States, but the Federal Trade Commission lost a court battle trying to stop it, effectively paving the way for its continuation.

The purchase is currently only being held up in the UK, where authorities earlier this year decided to block it over fears of stifling competition in the burgeoning cloud gaming market, where gamers avoid buying expensive consoles and playing games on it their tablets or phones can stream.

Under the restructured deal, Microsoft will sell cloud streaming rights outside the European Economic Area to French games studio Ubisoft Entertainment for all current and new Activision games released over the next 15 years, Microsoft President Brad Smith said in a statement blog post. The European Economic Area comprises the 27 EU states of Norway, Iceland and Liechtenstein.

In an unprecedented move, the UK regulator had postponed its final order blocking the deal. This allowed him to consider an EU decision to accept Microsoft's promise to automatically license Activision games for cloud gaming platforms, as well as a licensing deal between Microsoft and rival Sony, maker of the PlayStation console.

The CMA said Tuesday that those developments hadn't changed its original decision and issued an order blocking the deal. At the same time, considering the new Microsoft proposal, which is “materially different from what was previously on the table,” said Sarah Cardell, CEO of the UK regulator.

“That's not a green light,” Cardell said. “We will carefully and objectively review the details of the restructured deal and its competitive impact, including in light of third-party comments.”

The regulator's decision to open a new investigation rather than approve the deal was an unexpected move and raises the prospect of another lengthy scrutiny, said Alex Haffner, competition partner at British law firm Fladgate.

“In reality, however, it's hard to believe that Microsoft would have embarked on this new course without a high level of confidence that in due course it will now (finally) receive the green light from the CMA,” he said via email.

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