U.K. regulators approve Microsoft Activision Blizzard acquisition

The United Kingdom’s antitrust agency has finally given preliminary approval to Microsoft’s $68.7 billion acquisition of Activision Blizzard.

The Competition and Markets Authority issued a statement today saying it has give preliminary approval. The next step is for the CMA to gather third-party feedback, after which the CMA will reach a final decision. That means the merger is all but a done deal, after a regulatory process that involved an antitrust trial in the U.S. The companies originally proposed the merger in January 2022.

In a statement, Activision Blizzard said, “The CMA’s preliminary approval is great news for our future with Microsoft. We’re pleased the CMA has responded positively to the solutions Microsoft has proposed, and we look forward to working with Microsoft toward completing the regulatory review process.”

While other agencies around the world approved the deal, the CMA was concerned about the potential for Microsoft to dominate the cloud-gaming market. Today, the CMA said, “The sale of Activision’s cloud gaming rights to Ubisoft substantially addresses previous concerns and opens the door to the deal being cleared, the CMA said today.”

Microsoft’s president, Brad Smith, said in a statement, “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.”

Meanwhile, Sarah Cardell, CEO of the CMA, said in a statement, “The CMA’s position has been consistent throughout – this merger could only go ahead if competition, innovation, and choice in cloud gaming was preserved. In response to our original prohibition, Microsoft has now substantially restructured the deal, taking the necessary steps to address our original concerns.”

She added, “It would have been far better, though, if Microsoft had put forward this restructure during our original investigation. This case illustrates the costs, uncertainty and delay that parties can incur if a credible and effective remedy option exists but is not put on the table at the right time.”

While the CMA has identified limited residual concerns with the new deal, the agency said Microsoft has put forward remedies which the CMA has provisionally concluded should address these issues. The CMA said it 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.

It also said, “In particular, the sale of Activision’s cloud streaming rights to Ubisoft will prevent this important content – including games such as Call of Duty, Overwatch, and World of Warcraft – from coming under the control of Microsoft in relation to cloud gaming. The CMA originally found that Microsoft already has a strong position in cloud gaming services and could have used its control over Activision content to stifle competition and reinforce this position.”