Microsoft Corporation's (NASDAQ:MSFT) revised terms for the US$69 billion takeover of Activision Blizzard Inc (NASDAQ:ATVI) have been provisionally accepted by the UK competition watchdog.
After the Competition and Markets Authority originally blocked the deal in April over concerns about how the original deal would affect the cloud gaming market, the Xbox owner proposed a new deal last month, including spinning off rights for existing Activision games stored in the cloud – such as its massive Call of Duty and Candy Crush franchises – to Ubisoft Entertainment (OTC:UBSFF, EPA:UBI).
The CMA said today that it still had "limited residual concerns with the new deal", but Microsoft has come back with some new remedies that it accepts "should" address these residual concerns, though this is just its provisional conclusion.
A new consultation has been launched, closing in two weeks, on the proposed remedies. It still has another consultation ongoing into whether or not to grant Microsoft permission to buy Activision, running to the same date.
Its worry is that certain provisions in the divestment of Activision’s cloud streaming rights to Ubisoft "could be circumvented, terminated, or not enforced", it said.
Microsoft's remedies aim to ensure that the terms of the sale of Activision’s rights to Ubisoft are enforceable by the CMA.
The US giant said it will “continue to work towards earning approval to close prior to the October 18 deadline".
Colin Raftery, the CMA's senior director of mergers who was the decision maker on the Phase 1 investigation, said the deal was “new and substantially different, [and] keeps the cloud distribution of these important games in the hands of a strong independent supplier, Ubisoft, rather than under the control of Microsoft.”
He said the further remedies would offer “additional protections to make sure that the deal is properly implemented, this will maintain the structure of the market, enabling open competition to continue”.
Market analyst Victoria Scholar at Interactive Investor said the announcement today “is a major step forward towards getting the deal over the line".
“The tone has certainly turned a lot more positive, a shift from back in April when Microsoft’s president Brad Smith described the period as the tech giant’s ‘darkest days’ of working with the UK.”