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Published: 18:04, September 22, 2023
Britain set to clear fresh Microsoft-Activision deal
By Reuters
Published:18:04, September 22, 2023 By Reuters

An image from Activision's Call of Duty is shown on a smartphone near a photograph of the Microsoft logo in New York, June 15, 2023. (PHOTO / FILE / AP)

LONDON - Microsoft's restructured $69 billion acquisition of Activision Blizzard "opens the door" to the biggest ever gaming deal being cleared, Britain's antitrust regulator said on Friday.

Microsoft announced the deal in early 2022, but it was blocked in April by Britain's competition regulator, which was concerned the US tech giant would gain too much control of the nascent cloud gaming market.

In August, Call of Duty maker Activision agreed to sell its streaming rights to Ubisoft Entertainment in a new attempt to win over the Competition and Markets Authority.

The CMA said on Friday that the Ubisoft divestment "substantially addresses previous concerns".

"While the CMA has identified limited residual concerns with the new deal, Microsoft has put forward remedies which the CMA has provisionally concluded should address these issues," the regulator said.

Microsoft said it was "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, and we will continue to work toward earning approval to close prior to the Oct 18 deadline.

Brad Smith, president of Microsoft 

"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 Oct 18 deadline," Microsoft President Brad Smith said.

Activision, which also makes World of Warcraft, Overwatch and Candy Crush, said the preliminary approval was great news for its future with Microsoft.

Shares in Activision rose 1.6 percent and Microsoft inched up 0.3 percent in US premarket trading, while Ubisoft gained 3.6 percent in Paris.

The European Union waved the deal through in May after accepting Microsoft's commitments to license Activision's games to other platforms, the same remedies that Britain had rejected.

ALSO READ: Activision to sell streaming to secure biggest video gaming deal

The US Federal Trade Commission also opposes the deal, but it has failed in its attempts to stop it.

Late solution                                                                            

The CMA's decision to reopen the case after its block was a radical departure from its play book, but it said on Friday it had been consistent and Microsoft had "substantially restructured the deal" to address its concerns.

"It would have been far better, though, if Microsoft had put forward this restructure during our original investigation," CMA Chief Executive Sarah 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."

Equity analyst Sophie Lund-Yates at Hargreaves Lansdown said the loss of the cloud gaming rights was not an ideal concession for Microsoft to have to make, but it was necessary collateral if the deal were to be waved through.

"This looks to be the final bump in the road," she said.

READ MORE: Gamers renew legal challenge to Microsoft's Activision bid

The CMA said there were "residual concerns" around the Ubisoft deal, but Microsoft has offered remedies to ensure the terms of the sale were enforceable by the regulator.

It is now consulting on the remedies before making a final decision.

"Once the dust settles on what has been a tumultuous investigatory process, there will be important lessons to be learned by all concerned," said Alex Haffner, specialist competition lawyer at UK law firm Fladgate.

"The ongoing spotlight on the way that competition regulators such as the CMA deal with 'Big Tech' will continue to attract significant attention."

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