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UK regulator provisionally approves Microsoft's Activision-Blizzard buyout, following Ubisoft deal

Selling Actiblizz cloud gaming rights to Ubi will ensure "open competition", CMA says

A promotional image for Activision Blizzard games on Xbox
Image credit: Microsoft

The UK's Competition and Markets Authority have "provisionally" approved Microsoft's proposed acquisition of Activision Blizzard, removing the last major legal obstacle to the completion of the deal.

The CMA blocked the deal in April this year over concerns that it would "alter the future of the fast-growing cloud gaming market", and might lead "to reduced innovation and less choice for UK gamers over the years to come". Microsoft attempted to woo the regulator by agreeing to sell Activision Blizzard game cloud streaming rights to Ubisoft, and while the CMA have "limited residual concerns", they've largely accepted Microsoft's modifications.

According to a UK government statement, the "sale of the cloud gaming rights will establish Ubisoft as a key supplier of content to cloud gaming services, replicating the role that Activision would have played in the market as an independent player".

This means that "Microsoft will no longer control cloud gaming rights for Activision's content, so would not be in a position to limit access to Activision's key content to its own cloud gaming service or to withhold those games from rivals."

"Unlike the remedies the CMA previously rejected, Ubisoft will be free to offer Activision's games both directly to consumers and to all cloud gaming service providers however it chooses, including for buy-to-play or multigame subscription services, or any new model for providing content that might emerge as the market develops," the statement goes on.

"The deal with Ubisoft also requires Microsoft to port Activision games to operating systems other than Windows and support game emulators when requested, addressing the other main shortcoming with the previous remedies package."

The statement namechecks Call of Duty, Overwatch, and World of Warcraft as games Microsoft might have rendered exclusive to their cloud gaming services, under the original terms of the deal, so as "to stifle competition". It expresses confidence that selling Actiblizz cloud gaming rights to Ubisoft will maintain "open competition as the market for cloud gaming develops over the coming years".

So what of the CMA's lingering quibbles? "While the restructured deal is materially different to the previous transaction and substantially addresses most concerns, the CMA has limited residual concerns that certain provisions in the sale of Activision's cloud streaming rights to Ubisoft could be circumvented, terminated, or not enforced," the statement adds.

"To address these concerns, Microsoft has offered remedies to ensure that the terms of the sale of Activision's rights to Ubisoft are enforceable by the CMA. The CMA has provisionally concluded that this additional protection should resolve those residual concerns." The regulator has opened a consultation on Microsoft's proposed remedies that will run till 6th October 2023.

The CMA's CEO Sarah Cardell acknowledged that Microsoft have "substantially restructured the deal, taking the necessary steps to address our original concerns", but grilled the company over their tardiness.

"It would have been far better, though, if Microsoft had put forward this restructure during our original investigation," Cardell said. "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."

In theory, the CMA's announcement brings an end to around two years of haggling over one of the games industry's largest feats of consolidation, which was previously blocked by the USA's Federal Trade Commission, leading to court proceedings that, amongst other things, brought a lot of insider information to light about Microsoft's gaming empire and future plans. The CMA's decision probably won't assuage those of us who feel huge corporations buying up every competitor and IP in sight isn't great for the medium.

Activision Blizzard are currently the subject of a number of legal actions, labour disputes and allegations of workplace harassment. Rock Paper Shotgun will continue to write about these issues, as well as covering Activision Blizzard games as part of our commitment to cover subjects of interest to our readers. The latest news can always be found under our Activision Blizzard tag.

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