Microsoft Activision New Deal Triggers Fresh Investigation by U.K. Regulator

The U.K. Competition and Markets Authority (CMA) will open a fresh investigation after Microsoft and Activision Blizzard agreed on a new, restructured deal.

In April, the CMA had blocked Microsoft’s proposed $68.7 billion deal to buy video games giant Activision Blizzard over concerns the deal would alter the future of the fast-growing cloud gaming market, leading to reduced innovation and less choice for U.K. gamers.

Microsoft appealed against the decision, arguing that blocking the original deal was no longer appropriate in light of developments since then, including the acceptance of binding commitments by the European Commission and a licensing deal agreed between Sony and Microsoft.

The CMA reviewed the appeal and decided that it did not provide any basis for a change to the original prohibition decision. On Thursday, the CMA imposed a final order which prohibits the original deal on a worldwide basis.

Meanwhile, Microsoft and Activision have agreed a new, restructured deal, under which Microsoft will not acquire cloud rights for existing Activision PC and console games, or for new games released by Activision during the next 15 years (excluding the European Economic Area). Instead, these rights will be divested to Ubisoft Entertainment SA prior to Microsoft’s acquisition of Activision.

The new deal has been submitted to the CMA to review in a new investigation. The statutory deadline for a decision is Oct. 18.

Sarah Cardell, chief executive of the CMA, said: “The CMA has today confirmed that Microsoft’s acquisition of Activision, as originally proposed, cannot proceed. Separately, Microsoft has notified a new and restructured deal, which is substantially different from what was put on the table previously. As part of this new deal, Activision’s cloud streaming rights outside of the EEA will be sold to a rival, Ubisoft, who will be able to license out Activision’s content to any cloud gaming provider. This will allow gamers to access Activision’s games in different ways, including through cloud-based multigame subscription services. We will now consider this deal under a new phase 1 investigation.

This is not a green light. We will carefully and objectively assess the details of the restructured deal and its impact on competition, including in light of third-party comments. Our goal has not changed – any future decision on this new deal will ensure that the growing cloud gaming market continues to benefit from open and effective competition driving innovation and choice.”

Variety has reached out to Microsoft for comment.

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