Microsoft’s $68.7 billion bid to acquire gaming giant Activision Blizzard has been blocked by the U.K. Competition and Markets Authority (CMA). This decision has sparked a new investigation, as the CMA aims to maintain competition and innovation in the fast-growing cloud gaming market.
The CMA’s initial concerns were that the proposed deal between Microsoft and Activision Blizzard would have a detrimental impact on the future of cloud gaming, potentially resulting in reduced innovation and limited choice for gamers in the U.K. In response to this decision, Microsoft appealed, arguing that the circumstances had changed since the original decision was made.
Despite Microsoft’s appeal, the CMA found no grounds for changing their original prohibition decision. As a result, the CMA has now imposed a final order that prohibits the acquisition deal on a global scale.
However, Microsoft and Activision Blizzard have now entered into a new, restructured deal. Under this new agreement, Microsoft will not acquire the cloud rights for existing Activision PC and console games, as well as any new games released by Activision for the next 15 years, excluding the European Economic Area. Instead, these cloud streaming rights will be divested to Ubisoft Entertainment SA before Microsoft’s acquisition of Activision takes place.
This new deal has been submitted to the CMA for review in a fresh investigation, with the statutory deadline for a decision set for October 18th.
Sarah Cardell, the Chief Executive of the CMA, emphasized that the CMA’s goal remains the same – to ensure open and effective competition that drives innovation and choice in the growing cloud gaming market. Cardell explained that the new deal allows for Activision’s cloud rights to be sold to Ubisoft, who can then license out Activision’s content to various cloud gaming providers, thereby enabling gamers to access Activision’s games through different platforms, including cloud-based multigame subscription services.
The CMA will now thoroughly assess the details of this restructured deal and its impact on competition, taking into account feedback from third parties. The aim is to make a decision that supports a competitive gaming market while encouraging innovation and choice.
In conclusion, Microsoft’s bid to acquire Activision Blizzard has been blocked by the CMA, leading to a new investigation. The parties involved have agreed on a restructured deal that divests the cloud streaming rights to Ubisoft, ensuring competition and choice in the cloud gaming market. The CMA will conduct a phase 1 investigation into the new deal, prioritizing the continuation of open and effective competition that drives innovation for gamers.
