UK Regulator Signals Approval for Microsoft-Activision Deal

The United Kingdom’s competition watchdog has provided the strongest indication yet that it is prepared to approve Microsoft’s $68.7 billion takeover of Activision Blizzard. Following a comprehensive review of a revised proposal, the Competition and Markets Authority (CMA) announced that the changes submitted by Microsoft effectively resolve the anticompetitive concerns that led to the deal’s initial rejection in April.

The core of the regulator’s previous opposition centered on fears that Microsoft would monopolize the nascent cloud gaming sector. To satisfy these requirements, Microsoft restructured the transaction by divesting Activision’s cloud streaming rights to Ubisoft. According to the CMA, this strategic shift ensures that major titles like Call of Duty, Overwatch, and World of Warcraft remain available through independent cloud providers rather than being locked within Microsoft’s ecosystem.

Addressing Remaining Regulatory Hurdles

While the CMA has signaled a path toward clearance, the process is not yet finalized. The regulator identified minor “residual concerns” regarding the enforceability of the agreement between Microsoft and Ubisoft. To mitigate this, Microsoft has proposed additional remedies designed to ensure the terms of the rights transfer remain binding and enforceable. The CMA is currently running a public consultation on these specific remedies, which will remain open until October 6.

Colin Raftery, the CMA’s senior director of mergers, highlighted the significance of the shift:

• The deal now keeps cloud distribution rights for key franchises with an independent third party, Ubisoft.
• It prevents Microsoft from leveraging Activision content to stifle cloud gaming competition.
• New enforcement protections have been added to ensure the long-term viability of the agreement.

A Complex Regulatory Journey

The path to this potential approval has been arduous. While the European Union approved the merger in May and U.S. courts rejected an attempt by the Federal Trade Commission (FTC) to halt the acquisition, the UK remained the final major obstacle. Sarah Cardell, CEO of the CMA, noted that while the restructured deal addresses the watchdog’s mandate to preserve innovation and choice, the delay could have been avoided had these remedies been proposed during the initial investigation.

The regulatory clock is now ticking toward a final decision, with the CMA setting an October 18 deadline to conclude its investigation. Meanwhile, Microsoft and Activision are working against an internal deadline of mid-October to finalize the acquisition, following a previously agreed-upon extension. If the current momentum continues, the companies appear close to overcoming the last regulatory barrier to one of the largest acquisitions in tech history.