Mind-Blowing Twist: Microsoft-Activision: Shocking News Emerges as UK Inches Towards Final Closure of Restructured Deal!

The UK’s competition watchdog, the Competition and Markets Authority (CMA), has signaled its readiness to approve a restructured proposal for Microsoft’s acquisition of Activision. The CMA had previously blocked the $68.7 billion gaming megamerger, expressing concerns about its potential impact on competition in the cloud gaming market. However, Microsoft submitted a proposed restructured deal for review, which includes the sale of Activision’s cloud gaming rights to Ubisoft. The CMA now believes that this sale addresses previous concerns and opens the door for the deal to be approved.

The CMA’s original decision to block the merger in April was based on the belief that it would substantially weaken competition in the cloud gaming market. Microsoft already had a strong position in cloud gaming services, and the acquisition of Activision could have allowed them to stifle competition and reinforce their dominance. However, with the proposed sale of Activision’s cloud streaming rights to Ubisoft, Microsoft’s control over the content is limited, keeping competition open as the cloud gaming market evolves.

While the CMA still has some residual concerns about certain provisions in the sale of Activision’s cloud streaming rights to Ubisoft, Microsoft has offered remedies to address these concerns. The CMA has provisionally concluded that these remedies will resolve its residual concerns. However, the CMA has opened a consultation, which will run until October 6, to gather feedback on the proposed solutions put forward by Microsoft.

The Importance of the Restructured Deal

The restructured deal between Microsoft and Activision is seen as significant for several reasons:

1. Maintaining a Strong Independent Provider: By keeping the cloud distribution of Activision’s games in the hands of Ubisoft, a strong independent provider, the deal ensures that competition, innovation, and choice in cloud gaming are preserved. This structure of the market allows for open competition to continue shaping the development of cloud gaming in the years to come.
2. Preventing Microsoft’s Control Over Content: The sale of Activision’s cloud streaming rights to Ubisoft prevents Microsoft from gaining control over important content, such as popular games like Call of Duty, Overwatch, and World of Warcraft. This helps prevent Microsoft from using its control over the content to stifle competition and reinforce its position in the cloud gaming market.
3. Opportunity for UK Gamers: The restructured deal ensures that UK gamers will still have access to Activision games through various channels, including cloud-based multi-game subscription services. This guarantees that UK gamers can continue enjoying Activision’s games in different ways, thanks to the open competition in the cloud gaming market.

Timeline and Obstacles

The Microsoft-Activision acquisition is expected to be completed by the middle of next month, as the companies were granted an extension to their deadline. However, the CMA has set a deadline of October 18 to complete its investigation into the restructured proposal. Despite the earlier blockage by the CMA, today’s announcement suggests that the obstacles to the acquisition are finally being resolved, aligning the stars for Microsoft and Activision.

The dance to secure approval for the megamerger has been unusual but increasingly inevitable. The CMA’s decision to block the merger left it isolated among major global regulators, with European Union authorities authorizing the acquisition with certain conditions. US courts also blocked an earlier attempt by the FTC to sue to stop the deal. The blockade by the CMA has been the primary obstacle preventing the completion of the acquisition. The CMA has faced criticism from Microsoft, Activision, and other supporters of the deal.

Sarah Cardell, chief executive of the CMA, defended the organization’s approach, stating that the CMA’s position has remained consistent. They have insisted that the merger must preserve competition, innovation, and choice in cloud gaming. While Microsoft has now restructured the agreement to address the CMA’s concerns, the CMA believes it would have been better if Microsoft had proposed these changes during the original investigation. The case highlights the costs, delays, and uncertainties that can arise when a credible and effective remedy option exists but is not presented at the appropriate time.

Implications for EU Regulatory Authorities

The concessions offered by Microsoft in a bid to clear the CMA deal have sparked renewed attention from EU competition regulators. These regulators are seeking input from rivals and Microsoft customers regarding Microsoft’s proposals in the UK. The European Union had previously greenlit the acquisition, subject to conditions. Under the bloc’s approval, Microsoft agreed to license key Activision games to rival game streaming platforms. However, in the restructured proposal, Microsoft would not acquire the cloud streaming rights for all current and future Activision games globally, except in the European Economic Area. In this region, the rights would be sold to Ubisoft before the acquisition.

Summary

The UK’s competition watchdog, the CMA, is preparing to approve a restructured proposal for Microsoft’s acquisition of Activision. The proposal includes the sale of Activision’s cloud gaming rights to Ubisoft, addressing previous concerns about competition in the cloud gaming market. While the CMA still has some residual concerns, Microsoft has offered remedies aimed at resolving these concerns. The CMA has provisionally concluded that the proposed remedies will address its concerns. The CMA is currently seeking feedback on the proposed solutions. The Microsoft-Activision acquisition is expected to be completed by the middle of next month, pending final approval from the CMA.

The UK’s competition watchdog has signaled it is preparing to greenlight a restructured proposal for Microsoft to acquire Activision. In an update to his ongoing assessment today, saying he The agreement “makes important changes that substantially address concerns raised in connection with the original transaction earlier this year.”

The Competition and Markets Authority (CMA) blocked the $68.7 billion gaming megamerger in April – arguing that it would substantially weaken competition in the cloud gaming market – but last month opened a new investigation into a proposed restructured deal that Microsoft had submitted for review, while also confirming its April decision to block the original merger proposal.

The restructured deal proposes the sale of Activision’s cloud gaming rights to rival games maker Ubisoft, which the CMA has now suggested “substantially addresses previous concerns and opens the door for the deal to be approved”.

“In particular, the sale of Activision’s cloud streaming rights to Ubisoft will prevent this important content, including games like Call of Duty, Overwatch and World of Warcraft, from coming under Microsoft’s control in relation to games on the cloud,” he wrote. . “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. Instead, the new deal results in cloud streaming rights for Activision games being transferred to an independent player, Ubisoft, keeping competition open as the cloud gaming market develops in the next years”.

The regulator still has “limited residual concerns,” related to whether certain provisions in the sale of Activision’s cloud streaming rights to Ubisoft “could be circumvented, terminated or unenforceable.” But he said Microsoft has offered remedies aimed at ensuring that the terms of Activision’s rights sale to Ubisoft are enforceable by the regulator, and the CMA has provisionally concluded that they should resolve its residual concerns.

However, this is not the last step yet. It has now opened a consultation, until October 6, on the solutions proposed by Microsoft.

In a statement, Colin Raftery, senior director of mergers and Phase 1 decision maker at CMA, said:

This is a new and substantially different agreement, keeping cloud distribution of these important games in the hands of a strong independent provider, Ubisoft, rather than under the control of Microsoft.

With additional protections to ensure the agreement is implemented correctly, this will maintain the structure of the market, allowing open competition to continue to shape cloud gaming development for years to come and giving UK gamers the opportunity to access Activision games. in many different ways, including through cloud-based multi-game subscription services.

Microsoft and Activision have been given until the middle of next month to complete the acquisition, after an extension of their deadline that was agreed in July. So the schedule is tight.

The CMA has also set a deadline of October 18 to complete its investigation into the restructured proposal. However, today’s announcement suggests that the stars are finally aligning for Microsoft-Activision.

This dance to find a new way to approve the megamerger is unusual, but it has also felt increasingly inevitable after the UK regulator found itself isolated among major global regulators in blocking the megamerger.

European Union authorities authorized the acquisition with some conditions. in May. And then, at the end of this summerUS courts blocked an earlier attempt to the FTC to sue to stop the deal, leaving the CMA blockade as the only major obstacle in the way of Microsoft and Activision. The UK regulator has therefore been in the firing line of Microsoft, Activision and other supporters of the deal.

Sarah Cardell, chief executive of the CMA, once again defended her approach.

“The CMA’s position has been consistent throughout: this merger could only go ahead if competition, innovation and choice in cloud gaming is preserved,” it said in a statement. “In response to our original ban, Microsoft has now substantially restructured the agreement, taking the necessary steps to address our original concerns. However, it would have been much better if Microsoft had proposed this restructuring during our original investigation. “This case illustrates the costs, uncertainty and delays that parties can incur if a credible and effective remedy option exists but is not put on the table at the appropriate time.”

TO Reuters A report from earlier this month suggested that concessions Microsoft has offered in a bid to clear the CMA deal have sparked renewed attention from EU competition regulators, who are reportedly seeking input from rivals and Microsoft customers about Microsoft’s proposals in the UK.

The bloc’s approval of the deal saw Microsoft agree to license key Activision games, such as Call of Duty, to rival game streaming platforms, while the UK’s restructured proposal would see the tech giant not acquire the rights. Cloud streaming for all current and future Activision games. released over the next 15 years throughout the rest of the world, that is, except in the European Economic Area, where those rights would instead be sold to Ubisoft before the acquisition.