UK Regulator Opens New Probe into Microsoft-Activision Deal

The United Kingdom’s Competition and Markets Authority (CMA) has officially finalized its decision to block the original $68.7 billion acquisition of Activision Blizzard by Microsoft. Despite rejecting the tech giant’s initial appeal to overturn the prohibition, the regulator has simultaneously launched a fresh Phase 1 investigation into a significantly restructured proposal submitted by the companies.

Under the terms of this new submission, Microsoft would divest the cloud streaming rights for all current and future Activision titles released over the next 15 years to Ubisoft. This exclusion applies globally, with the exception of the European Economic Area (EEA), where Microsoft previously secured regulatory approval by offering separate commitments.

A Shift in Regulatory Strategy

Sarah Cardell, chief executive of the CMA, characterized the revised offer as “substantially different” from the previous version that sparked antitrust concerns. The primary objective of the regulator remains the preservation of competition within the emerging cloud gaming sector.

• Ubisoft’s Role: Ubisoft would acquire the rights to license Activision’s content to any cloud gaming provider, supporting various business models including subscription services.
• Technical Compatibility: The proposal includes provisions for Ubisoft to require Microsoft to adapt Activision titles for non-Windows operating systems, such as Linux, addressing previous concerns regarding platform control.
• Financial Framework: If the deal proceeds, Ubisoft would compensate Microsoft via a one-off payment and a market-based wholesale pricing mechanism.

“This is not a green light,” Cardell stated in an official release. “We will carefully and objectively assess the details of the restructured deal and its impact on competition, including in light of third-party comments.”

The Path Toward October

The CMA now faces a tight timeline for its new investigation. The deadline for completing the review is set for October 18, which aligns with the extended closing date Microsoft and Activision have established for the merger. This move follows a period of isolation for the UK regulator, as the European Union approved the acquisition in May, and U.S. courts recently declined to grant an injunction requested by the Federal Trade Commission (FTC).

The exclusion of the EEA from this new proposal is a direct result of the concessions already granted to EU regulators. While the atmosphere surrounding the CMA’s announcement appears more constructive than in previous months, the regulator maintains that it has not reached a final conclusion. The coming weeks will be dedicated to scrutinizing the deal’s mechanics and gathering input from industry competitors to ensure the cloud gaming market remains open for innovation and consumer choice.