In a significant development, Microsoft (MSFT) has moved closer to finalizing its $69 billion acquisition of “Call of Duty” game developer, Activision Blizzard (ATVI), in the United Kingdom. Regulatory scrutiny had held up the deal for much of this year. On Friday, the UK’s Competition and Markets Authority (CMA) announced the completion of the first phase of reviewing a revised proposal from Microsoft. This new proposal involves ceding Activision’s cloud gaming rights to French gaming behemoth Ubisoft (UBI.PA), a move aimed at assuaging concerns over competition in the cloud gaming market.
The CMA had previously blocked the deal over fears that it would stifle competition in this rapidly evolving sector. The agency had set a deadline of October 18 to assess the amended proposal, coinciding with the expiration of an extended deadline for Microsoft’s merger with Activision. The initial agreement between the two companies was reached in January 2022.
A press release from the CMA on Tuesday emphasized that Microsoft’s concession “substantially addresses previous concerns and opens the door to the deal being cleared.” An official from the CMA stated that this revised proposal presents “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.”
However, the CMA noted “limited residual concerns” in the proposal, citing potential circumvention, termination, or non-enforcement of certain provisions. The agency expressed confidence that Microsoft’s proposed remedies would adequately address these issues. The proposed remedies are currently under consultation before a final decision is made.
Microsoft’s Vice Chair and President, Brad Smith, expressed optimism about the progress in the CMA’s review process, stating, “We presented solutions that we believe fully address the CMA’s remaining concerns related to cloud game streaming, and we will continue to work toward earning approval to close prior to the October 18 deadline.”
Microsoft previously encountered regulatory scrutiny in the United States. However, in a pivotal development in July, the Federal Trade Commission withdrew its challenge to the acquisition, leaving the CMA as the sole competition authority standing in the way of the deal. Activision Blizzard CEO, Bobby Kotick, commended the CMA’s forward movement in a statement, affirming, “This is a significant milestone for the merger and a testament to our solutions-oriented work with regulators. I remain optimistic as we continue the journey toward completion and am very grateful to each of you for your dedication and focus throughout this process.”
The decision by the US agency to drop its challenge was based on a federal appeals court denying its request to temporarily halt the deal’s closure. Microsoft and Activision Blizzard are now on the brink of finalizing their deal, with both companies expressing confidence in achieving closure before the October 18 deadline.
Source: Yahoo Finance
