CMA clears Microsoft’s Activision Blizzard purchase

The UK’s Competition and Markets Authority has given the green light to Microsoft’s acquisition of Activision Blizzard, following a modification of the original deal in relation to cloud gaming.

The UK regulator initially blocked the $69 billion purchase, the largest in gaming history, in April having concluded that the combined entity could dominate the cloud gaming market. This was based on Microsoft’s already strong position in PC gaming and ownership of the Xbox platform, and fears that it could restrict competitors’ cloud access to Activision games – including mega-hits such as Call of Duty and Fortnight.

After a fair amount of moaning about the decision on Twitter, an amended proposal was put forward in August which would mean Microsoft would not acquire the cloud streaming rights to all current and future Activision games released during the next 15 years, and they would instead be divested to games publisher Ubisoft – though this excludes the EEA where a separate deal was reached.

Ubisoft would therefore have the ability to supply Activision’s gaming content to all cloud gaming service providers, including to Microsoft itself, and license out the games under different business models.

This narrower transaction excluding cloud gaming rights has now been cleared by CMA, it having apparently addressed their concerns over granting Microsoft potential dominance in the space.

“We delivered a clear message to Microsoft that the deal would be blocked unless they comprehensively addressed our concerns and stuck to our guns on that, said Sarah Cardell, Chief Executive of the CMA. “With the sale of Activision’s cloud streaming rights to Ubisoft, we’ve made sure Microsoft can’t have a stranglehold over this important and rapidly developing market. As cloud gaming grows, this intervention will ensure people get more competitive prices, better services and more choice. We are the only competition agency globally to have delivered this outcome.”

However the regulator had a bit of a rebuke for Microsoft’s actions during the process:

“But businesses and their advisors should be in no doubt that the tactics employed by Microsoft are no way to engage with the CMA. Microsoft had the chance to restructure during our initial investigation but instead continued to insist on a package of measures that we told them simply wouldn’t work. Dragging out proceedings in this way only wastes time and money.”

Martin Coleman, Chair of the Independent Panel who reviewed the original Microsoft deal, added: “We now have a new transaction in which the cloud distribution of Activision games, old and new, is taken away from Microsoft and put into the hands of Ubisoft, an independent party who is committed to widening access to the games. That’s better for competition, better for consumers and better for economic growth.”

The hesitance of the CMA to grant Microsoft such huge real estate in the nascent cloud gaming market on paper does seem to have some merit to it – the firm does have form in cornering markets in other areas after all. Regardless, the long regulatory back and forth now seems to be over, and no doubt there will be champagne corks being popped around the offices of Microsoft and Activision.

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