Tech giant Microsoft has resubmitted a new proposal to the UK’s competition watchdog in its ongoing effort to acquire Activision Blizzard, the company responsible for creating popular games like Call of Duty. This move comes after a previous version of the transaction was rejected, according to officials on Tuesday.
Microsoft, renowned for its Xbox gaming console, initially made a bid for Activision Blizzard in early 2021, with the goal of surpassing China’s Tencent and Japan’s Sony to become the third-largest revenue-generating gaming company worldwide.
However, regulatory scrutiny has persisted for the $69 billion deal, which seeks to integrate the company behind games such as Candy Crush, World of Warcraft, and Call of Duty.
The UK’s Competition and Markets Authority (CMA) announced its initiation of a “new phase 1 investigation into a restructured deal proposed by Microsoft for the acquisition of Activision.” This revised proposal comes after the regulator’s determination that “the original deal would be blocked to safeguard innovation and choice in cloud gaming.”
According to the new arrangement, as detailed by the CMA, “Microsoft will not obtain cloud rights for current Activision PC and console games, or for upcoming games released by Activision within the next 15 years (excluding the European Economic Area).”
Instead, these cloud rights will be handed over to French game developer Ubisoft Entertainment before Microsoft finalizes the acquisition of Activision, as confirmed by the CMA.
Ubisoft will possess “the ability to offer Activision’s gaming content to all cloud gaming service providers (including Microsoft itself).”
Sarah Cardell, the CEO of CMA, underlined that “this is not a signal to proceed.”
“Our objective remains unaltered – any forthcoming decision concerning this fresh proposal will ensure the burgeoning cloud gaming market continues to derive benefits from open and effective competition, fostering innovation and providing choices,” Cardell emphasized.
The review’s new deadline has been set for October 18.
The launch of a fresh investigation “places the merging parties at risk of encountering another potentially extended process to address raised competition concerns,” commented Alex Haffner, competition partner at UK law firm Fladgate.
“However, it’s difficult to imagine Microsoft pursuing this new path without a significant level of confidence that it will ultimately receive regulatory approval from the CMA,” Haffner added.
Both Microsoft and Activision have affirmed their unwavering commitment to the deal and have extended their timeline until October 18 to finalize the transaction.
While the European Union granted clearance for the deal in May, the US antitrust regulator temporarily halted its efforts to block the acquisition in late July following a legal setback.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, underscored that the divestment to Ubisoft is intended “to prevent Microsoft from making popular titles like Call of Duty exclusive to its platforms.”
“With other obstacles in the EU and US now overcome, Microsoft is entering the final stretch, although there is no assurance that another hurdle won’t emerge,” Streeter remarked.
