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Microsoft has taken a significant step forward in its proposed acquisition of Activision Blizzard. The UK’s Competition Authority provisionally accepted the amendments made by Microsoft in its $75 billion takeover deal with the Call of Duty developer.
Last month, Microsoft and Activision submitted a revised merger agreement to the Competition and Markets Authority (CMA) to address concerns raised by the watchdog regarding potential harm to competition. The CMA had previously blocked the merger in April, but attempts by the US Federal Trade Commission (FTC) to halt the transaction have been unsuccessful in court.
Regulators such as the EU have already approved the deal, as Microsoft has made commitments to license Activision’s catalog to other cloud streaming services. The revised proposal to the CMA included an agreement to sell Activision’s cloud streaming rights to French rival Ubisoft, preventing Microsoft from exclusively releasing Activision’s games on its own Xbox Cloud Gaming service.
“Microsoft has substantially restructured the deal to address our concerns,” said Sarah Cardell, CEO of the CMA. The CMA expressed limited residual concerns that certain aspects could be avoided or not enforced, but Microsoft offered remedies to ensure the enforceability of the sale of Activision’s rights to Ubisoft.
Gareth Sutcliffe, a games analyst at Enders Analysis, sees the provisional approval as a compromise for both parties, with the main components of the deal intact. The CMA’s new consultation period will run until October 6, setting the stage for final approval before the October 18 deadline.
Since the initial ruling by the CMA, Microsoft has secured additional licensing deals with rivals, including Sony, to gain access to Activision’s games in an effort to alleviate regulators’ concerns.
Brad Smith, President of Microsoft, expressed optimism about the review process and stated that solutions have been presented to address the CMA’s concerns related to cloud game streaming. Activision also welcomed the preliminary approval.
Sutcliffe predicts potential fallout for Microsoft’s top executives due to the extended process and the costs incurred to obtain approval.
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