Microsoft's suggested acquisition of Activision Blizzard has received preliminary approval from the UK regulator Competition and Markets Authority (CMA).
The CMA initially opposed the acquisition in April out of worries about how it would affect the emerging cloud gaming market. It has since become the last significant hurdle standing in the way of the deal closing.
The CMA began a new merger investigation as a result of Microsoft's attempt to restructure its proposed acquisition by agreeing to sell Ubisoft the cloud streaming rights.
This action now appears to have satisfied the CMA, as it posted its provisional decision today.
Although there are some minor remaining issues with the new agreement, according to the statement, Microsoft has proposed remedies that the CMA has tentatively concluded should resolve these problems.
"While the restructured deal is materially different from the prior transaction and substantially allays most concerns, the CMA has limited residual concerns that certain provisions in the sale of Activision's cloud streaming rights to Ubisoft could be avoided, terminated, or not enforced," the statement continues.
"Microsoft has provided remedies to address these worries and make sure the CMA can uphold the terms of the sale of Activision's rights to Ubisoft. The CMA has proviso determined that the additional protection should allay any remaining worries.
The CMA has started a consultation period that will last until October 6 after which it will make a decision. It should now be anticipated that the CMA will approve the deal, barring any significant objections that throw new light on the situation.
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…
— Brad Smith (@BradSmi) September 22, 2023
"We are encouraged by this positive development in the CMA's review process," Microsoft President and Vice Chair Brad Smith tweeted in response to the publication of the provisional decision by the CMA.
"We presented solutions that we believe fully address the CMA's remaining concerns about cloud game streaming, and we will continue to work toward obtaining approval to close before the October 18 deadline."
Colin Raftery, the CMA's senior director of mergers and Phase 1 decision maker, commented on the provisional decision and expressed satisfaction that Microsoft's new proposal allayed his concerns.
This is a new and significantly different agreement that keeps control of the cloud distribution of these significant games off of Microsoft's shoulders and instead in the hands of Ubisoft, a strong independent supplier, according to Raftery.
"Based on extra precautions to ensure that the agreement is properly implemented, this will maintain the market's structure, enabling open competition to continue to shape the development of cloud gaming in the years to come and allowing UK gamers the opportunity to access Activision's games in a variety of ways, including through cloud-based multigame subscription offerings."