The Competition and Markets Authority (CMA) has delivered a preliminary decision today, and they have changed their stance.
In April of this year, the CMA initially rejected the $68.7 billion mega-deal, citing concerns that it could stifle competition in cloud-based gaming. Since then, Microsoft has taken measures, such as allowing Ubisoft to handle the streaming of Activision games for a 15-year period. This move is expected to give Ubisoft a competitive position against Microsoft similar to what Activision currently enjoys. As a result, the CMA is leaning towards approving the deal.
In contrast to the original deal, 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 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.
In particular, the sale of Activision’s cloud streaming rights to Ubisoft will prevent this important content – including games such as Call of Duty, Overwatch, and World of Warcraft – from coming under the control of Microsoft in relation to cloud gaming.
However, the CMA still has objections to the deal, specifically concerning the language in the agreement that grants Ubisoft the streaming rights. They are concerned that the agreement could be circumvented, terminated, or not implemented. However, Microsoft is in the process of addressing these issues, and the CMA believes it should be sufficient for approval.
The CMA’s final decision will be announced on October 6th.
The Activision Blizzard deal in brief:
In January 2022, it was revealed that Microsoft wanted to acquire Activision, Blizzard, and King for $68.7 billion. The deal would give them control over games such as Diablo, World of Warcraft, Call of Duty, and Candy Crush.
Authorities worldwide have been examining the potential effects of the deal on competition. The FTC (USA) and CMA (UK) have not yet approved it, but in the USA, a federal court has effectively given the deal the green light.
Microsoft had initially set a self-imposed deadline of July 18, but it has been renegotiated to October 18.