The UK’s Competition and Markets Authority has given its provisional approval to recently proposed modifications to Microsoft’s proposed Activision purchase. While the approval is not final, the announcement suggests that Microsoft will soon clear the final regulatory hurdle in its proposed $68.7 billion acquisition, which was first announced over 20 months ago.
The CMA initially blocked the Activision acquisition back in April, saying that the purchase would “substantially lessen competition” in the nascent cloud gaming market. But after the US Federal Trade Commission’s attempt at a merger-blocking injunction lost in court in April, Microsoft and the CMA went back to the drawing board to negotiate a settlement.
That led to Microsoft’s August announcement that it would sell those Activision streaming rights to Ubisoft. The CMA now says it “has provisionally concluded” that this sale “should address these [previously identified] issues.”
“In contrast to the original deal, Microsoft will no longer control cloud gaming rights for Activision’s content, so would not be in a position to limit access to Activision’s key content to its own cloud gaming service or to withhold those games from rivals,” the CMA writes. “Unlike the remedies the CMA previously rejected, Ubisoft will be free to offer Activision’s games both directly to consumers and to all cloud gaming service providers however it chooses, including for buy-to-play or multigame subscription services, or any new model for providing content that might emerge as the market develops.”
The CMA’s statement still identifies “limited residual concerns” that some parts of Microsoft’s proposed deal could be “circumvented, terminated, or not enforced,” but the statement adds that Microsoft has made proposals to ensure that the terms are “enforceable by the CMA.”
While the FTC has appealed its recent court loss, an appeals court refused to block the merger while that appeal is pending. That means CMA approval would clear the way for the proposed merger to finally close before a recently extended contractual deadline of October 18.
“We are encouraged by this positive development in the CMA’s review process,” Microsoft Vice Chair and President Brad Smith said in a statement. “We presented solutions that we believe fully address the CMA’s remaining concerns related to cloud game streaming, and we will continue to work toward earning approval to close prior to the October 18 deadline.”
“The CMA’s preliminary approval is great news for our future with Microsoft,” Activision Blizzard said in a statement. “We’re pleased the CMA has responded positively to the solutions Microsoft has proposed, and we look forward to working with Microsoft toward completing the regulatory review process.”
The CMA will gather additional feedback through October 6, after which a final decision could come quickly.