Microsoft tries again to get UK clearance for Activision deal

The move comes as the CMA confirmed that it had rejected an appeal raised by Microsoft against its decision earlier this year to block its original proposals for acquiring Activision, which both develops and publishes video games.

Activision is the company behind a number of popular games series, including Call of Duty. Microsoft agreed a deal to acquire Activision for $68.7 billion in January 2022. Completion of the deal is subject to clearance by competition authorities globally, however.

While the deal has been cleared by competition authorities in the US and EU, the CMA decided to prevent the deal going ahead in the UK because of concerns it had over its potential impact on competition in the cloud gaming market. Microsoft had at that time committed to make some Activision games, including Call of Duty, available royalty-free on other cloud gaming platforms beyond its own for a period of 10 years. However, the CMA identified “shortcomings” with the proposed remedy and considered that the only way to address the risk of a substantial lessening of competition in the cloud gaming services market was to prohibit the merger.

Microsoft has now agreed a restructured deal with Activision for consideration by the UK authority. Under that deal, Activision’s cloud streaming rights outside of the European Economic Area, covering existing and new games over a 15-year period, will be sold to rival Ubisoft, who in turn will be able to license out Activision’s content to any cloud gaming provider.

The CMA has confirmed that it has opened a fresh ‘phase 1’ investigation into the restructured deal. During this phase, the CMA will determine whether there is a realistic prospect that the merger gives rise to a substantial lessening of competition. If it determines that this threshold has been met, it may either negotiate with Microsoft further remedies to resolve its concerns or it will open a more in-depth ‘phase 2’ investigation into the deal. If it considers that the threshold is not met, the deal will be cleared for completion in the UK.

Sarah Cardell, chief executive of the CMA, said: “This is not a green light. We will carefully and objectively assess the details of the restructured deal and its impact on competition, including in light of third-party comments. Our goal has not changed – any future decision on this new deal will ensure that the growing cloud gaming market continues to benefit from open and effective competition driving innovation and choice.”