Microsoft’s Activision Blizzard deal approved by UK regulators

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Illustration by William Joel / The Verge

Microsoft’s $68.7 billion deal to acquire Activision Blizzard has been approved by UK regulators. The UK’s Competition and Markets Authority (CMA) has concluded that the deal can proceed after Microsoft recently restructured the deal to transfer cloud gaming rights for current and new Activision Blizzard games to Ubisoft. The decision clears the way for the deal to close now that the UK regulator has given the green light.

“The CMA has decided to give Microsoft Corporation (Microsoft) consent to acquire Activision Blizzard, Inc. (Activision) (the Parties) excluding Activision’s cloud streaming rights outside of the European Economic Area (EEA) (the Merger) subject to the condition that the sale of Activision’s cloud streaming rights completes prior to completion of the Merger,” reads a statement from the CMA.

We’ve cleared the new deal for Microsoft to buy Activision without cloud gaming rights.

In August, Microsoft made a concession that would see Ubisoft, instead of Microsoft, buy Activision’s cloud gaming rights.

Read more: https://t.co/Z4scLEJFy0

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— Competition & Markets Authority (@CMAgovUK) October 13, 2023

The CMA describes Microsoft’s concession as a “gamechanger that will promote competition” in the growing cloud gaming market. “With the sale of Activision’s cloud streaming rights to Ubisoft, we’ve made sure Microsoft can’t have a stranglehold over this important and rapidly developing market,” says Sarah Cardell, CEO of the CMA. “As cloud gaming grows, this intervention will ensure people get more competitive prices, better services and more choice. We are the only competition agency globally to have delivered this outcome.”

Microsoft vice chair and president Brad Smith says the company welcomes the CMA’s decision. “We have now crossed the final regulatory hurdle to close this acquisition, which we believe will benefit players and the gaming industry worldwide,” says Smith in a message on X (formerly Twitter).

We’re now awaiting news from Microsoft about the finalization of the acquisition. The Verge reported last week that Microsoft was getting ready to close its Activision Blizzard deal today, Friday October 13th.

We’re grateful for the CMA’s thorough review and decision today. We have now crossed the final regulatory hurdle to close this acquisition, which we believe will benefit players and the gaming industry worldwide.

— Brad Smith (@BradSmi) October 13, 2023

Activision Blizzard CEO Bobby Kotick emailed all employees today announcing the news. “We now have all regulatory approvals necessary to close and we look forward to bringing joy and connection to even more players around the world,” said Kotick. “We’re excited for our next chapter together with Microsoft and the endless possibilities it creates for you and for our players.”

The CMA’s decision comes months after the regulator initially moved to block Microsoft’s deal in April over cloud gaming concerns. Microsoft appealed that decision with the UK’s Competition Appeal Tribunal (CAT), but both parties put that process on hold in July to make way for Microsoft’s restructured deal that was designed to address the concerns. After successful discussions with the CMA, Microsoft and Activision Blizzard agreed to extend their merger agreement deadline to October 18th.

The Xbox maker originally announced the deal in January 2022, and has faced close scrutiny from regulators ever since — including an FTC v. Microsoft case that revealed plenty of Xbox secrets. The Federal Trade Commission is still appealing its failure to secure a preliminary injunction to block Microsoft’s deal, with a decision from the Ninth Circuit Court of Appeals due in December.

Photo by Cameron Faulkner / The Verge

Cloud gaming is a growing market for Microsoft and others.

As the FTC doesn’t have a preliminary injunction in place, Microsoft is now clear to close its proposed Activision Blizzard acquisition ahead of the deal deadline. The closure will bring to an end a 20-month process of regulatory approvals and battles, and comes months after EU regulators approved the deal thanks to additional concessions from Microsoft.

Microsoft’s obligations to the European Commission will allow consumers in EU countries to stream via “any cloud game streaming services of their choice” all current and future Activision Blizzard PC and console games that they have a license for.

Microsoft has made several cloud gaming deals to license Activision Blizzard content, and the company’s restructured deal means it won’t control the cloud gaming rights to Activision Blizzard outside of EU markets. Ubisoft will acquire these rights for a period of 15 years, allowing the publisher to license titles back to Microsoft to be included in Xbox Cloud Gaming.