Microsoft Offers U.K. Changes to Activision Deal
The News
British antitrust officials said on Tuesday that they were reviewing a revised offer by Microsoft to win approval of its $69 billion merger with Activision Blizzard, an effort to clear the biggest remaining regulatory hurdle to the major video games deal.
To address the concerns of British regulators that the deal would stunt the development of a new area of gaming technology, Microsoft said it would transfer the cloud streaming licensing rights for all current and new Activision Blizzard games to Ubisoft Entertainment, a rival game publisher.
Why It Matters: The offer aims to address concerns over cloud gaming.
The deal that once faced long odds now appears to be on a path to approval. Britain is the last major holdout standing in the way of completing the blockbuster acquisition.
Microsoft’s revised offer is an effort to win over the country’s main antitrust regulator, the Competition and Markets Authority, which said in April that it would to block the merger because of concerns about its impact on so-called cloud gaming, an emerging area of technology that lets people stream games on phones, tablets and other devices, potentially eliminating the need for consoles.
Under the new terms, Microsoft would give Ubisoft control over licensing deals for cloud gaming services for 15 years. This is aimed at preventing Microsoft from launching titles exclusively on its own cloud streaming service, Xbox Cloud Gaming.
Sarah Cardell, the chief executive of the Competition and Markets Authority, called the offer “substantially different from what was put on the table previously,” yet cautioned that “this is not a green light.”
“Our goal has not changed,” she said in a statement. “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.”
Background: Microsoft has overcome other objections to the deal.
After announcing its intension to buy Activision in January 2022, Microsoft has faced a gantlet of scrutiny, as the deal has become a test of whether regulators around the world would approve a tech megamerger amid concerns about the industry’s power. Rivals such as Sony lobbied for it to be blocked.
The acquisition faced an uphill climb after the U.S. Federal Trade Commission sued to block it in December and the British authorities said they would likewise try to stop the acquisition.
But Microsoft scored a major victory in May when the European Union approved the deal. And in July, a U.S. federal judge ruled against the F.T.C.’s efforts to slow down the deal, leaving only the British authorities as a major obstacle to clear.
What’s Next: A decision is expected by October.
The British regulator said it would issue a decision by Oct. 18, the date that Microsoft has set as a deadline to complete its deal with Activision.
