The United Kingdom’s Competition Markets Authority (CMA) recently stated that Microsoft’s updated offer to acquire Activision Blizzard “opens the door” for the deal to receive the green light. This development has major implications for the gaming industry. Below, we delve into the specifics of the revised deal and why it stands a better chance of passing regulatory scrutiny.

The Original Obstacle

Microsoft initially announced its intention to acquire Activision Blizzard in a deal valued at $69 billion (£59 billion). However, the CMA raised concerns that the acquisition would stifle competition within the cloud gaming sector in the UK. This led to the initial proposal being blocked. Consequently, Microsoft went back to the drawing board to craft a revised offer.

The Revised Proposal

In the updated offer, Microsoft has decided not to acquire the cloud gaming rights owned by Activision Blizzard. Instead, these rights will be transferred to French video game publisher Ubisoft for a period of 15 years. This means that popular games like Call of Duty, Overwatch, and World of Warcraft will remain outside Microsoft’s control in terms of cloud streaming.

CMA’s Stance

Sarah Cardell, the CMA’s chief executive, made it clear that the authority’s position has been consistent. She emphasized that the merger could only proceed if it did not impede competition, innovation, and choice in cloud gaming. While the CMA still harbors “limited residual concerns,” the revised deal sufficiently addresses these issues by keeping cloud distribution under Ubisoft, an independent supplier.

Global Implications

This deal has already passed regulatory scrutiny in the European Union and has also faced opposition in the United States. The UK’s likely approval could set a precedent for other countries to follow. It should be noted that a consultation will still take place before a final decision is rendered.

Industry Reactions

Sony had previously objected to Microsoft’s acquisition plans, fearing it could affect the availability of major games on its PlayStation consoles. However, the CMA stated that the revised deal ensures gamers can access Activision’s titles in multiple ways, including cloud-based multi-game subscription services.

What’s Next?

The final decision by the CMA will conclude a significant “test case” on how competition rules might function in the post-Brexit UK. Microsoft hopes to receive final approval before the consultation closes on October 6. If the CMA does not approve, the global deal will not proceed.

Conclusion

Microsoft’s revised proposal for acquiring Activision Blizzard has improved its chances of receiving UK regulatory approval. The deal, if approved, would mark a monumental shift in the gaming industry, affecting everything from cloud gaming to console sales. It remains to be seen whether the CMA’s forthcoming decision will officially clear the path for this historic acquisition.

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