CMA says new Microsoft-Activision deal addresses concerns

Meet gaming's power couple, with Ubisoft the third wheel. Now competition watchdog must ensure Windows biz keeps promises

Microsoft is busy plumping cushions in anticipation of its new gaming bedfellow Activision Blizzard after the UK's Competition and Markets Authority said most of its concerns about the merger had been addressed.

The CMA dug in its heels to block the largest acquisition in tech history claiming that it would give Microsoft outsized power in the fledgling cloud gaming market, long after competition regulators in other jurisdictions had waved the deal through.

As such, it was important that Microsoft found a way to sweeten the CMA so last month – seemingly out of desperation more than anything – it proposed divesting cloud streaming rights for Activision games to France's Ubisoft.

This appears to have worked, going by an announcement from the CMA this morning.

While it said "limited residual concerns" about the $69 billion purchase remained, Microsoft's proposed remedies should address these issues – "provisionally" anyway.

"The CMA considers that the restructured deal makes important changes that substantially address the concerns it set out in relation to the original transaction earlier this year," the watchdog said.

However, the CMA is cautious that "certain provisions in the sale of Activision's cloud streaming rights to Ubisoft could be circumvented, terminated, or not enforced." In other words, it does not want Microsoft to say it'll do one thing then do the opposite.

Microsoft has form for breaking promises when it comes to antitrust disputes after all.

"To address these concerns, Microsoft has offered remedies to ensure that the terms of the sale of Activision's rights to Ubisoft are enforceable by the CMA. The CMA has provisionally concluded that this additional protection should resolve those residual concerns."

So we're done here. Nothing more to see. You're pretty much safe to assume that short of a nuclear holocaust Activision Blizzard is now a part of Microsoft, only with Ubisoft handling the streaming of Call of Duty, Overwatch, World of Warcraft, and so on going forward.

The CMA just has to do one more consultation (they love those) running until October 6 on Microsoft's remedies, then it'll be case closed. Comments can be submitted here.

Microsoft president Brad Smith welcomed the news, saying: "We are 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 October 18 deadline."

Alex Haffner, specialist competition lawyer and partner at UK law firm Fladgate, commented: "Assuming that is the end result, both sides will (publicly at least) feel that they have achieved the desired outcome: Microsoft by removing the last major impediment to completing this important deal and the CMA in securing sufficient concessions from the parties to demonstrate that its concerns about any negative impact on competition and consumers have been met. Nonetheless, once the dust settles on what has been a tumultuous investigatory process there will be important lessons to be learned by all concerned and the ongoing spotlight on the way that competition regulators such as the CMA deal with 'Big Tech' will continue to attract significant attention.

"Microsoft had already set out, in the terms of a 'new deal' put before the regulator, that it was willing to sell important rights to sell cloud gaming versions of Activision gaming titles to Ubisoft. In its announcement today, the CMA has effectively endorsed that concession as being sufficient to mitigate the competition concerns which the CMA had previously raised as being an insurmountable barrier to the transaction getting UK regulatory clearance (under the terms of the original deal put forward by the merging parties). In practical terms, it has given interested parties two weeks to comment on the remedies proposed before reaching a final decision, but it now seems inevitable that the deal with receive full and final clearance." ®

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