Microsoft cleared to acquire Activision Blizzard as UK grants approval

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The UK's Competition and Markets Authority has given Microsoft the approval needed to finally acquire Activision Blizzard.

The regulator blocked the $68.7 billion deal earlier this year, primarily over concerns about competition in the cloud gaming space.

To address this, Microsoft proposed a modified deal in which is sells the cloud gaming rights for all of Activision Blizzard's titles - including any new releases for the next 15 years - to an independent third party, Ubisoft. The CMA provisionally approved this deal two weeks ago.

In its final decision published this morning, the CMA stated that the sale of these rights will "stop Microsoft from locking up competition in cloud gaming as this market takes off, preserving competitive prices and services for UK cloud gaming customers."

The regulator emphasised it will also allow Ubisoft to distribute Activision’s games under any cloud gaming business model, including multi-game subscription services other than Xbox Game Pass. Other cloud gaming providers will be also able to use non-Windows operating systems for Activision's games.

Consent for the deal to go ahead is conditional on the Ubisoft divestment agreement completing before the acquisition.

In its provisional approval, the CMA said it had limited residual concerns about the modified deal but now says that Microsoft has "[given] undertakings that will ensure that the terms of the sale of Activision’s rights to Ubisoft are enforceable by the CMA."

The CMA has also been running a public consultation to gather external opinions on the modified deal, including those of the public, but said there was no feedback that sufficiently argued that approval should not be given.

"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," said Sarah Cardell, the CMA's chief executive. "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. 

"But businesses and their advisors should be in no doubt that the tactics employed by Microsoft are no way to engage with the CMA. Microsoft had the chance to restructure during our initial investigation but instead continued to insist on a package of measures that we told them simply wouldn’t work. Dragging out proceedings in this way only wastes time and money."

In a post on X, formerly known a Twitter, Microsoft president Brad Smith posted: "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."

In an email to Activision Blizzard employees shared online, Activision Blizzard CEO Bobby Kotick said: "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.

"Our board chair Brian Kelly and I are incredibly proud of all of you and your accomplishments over the last four decades. We’re excited for our next chapter together with Microsoft and the endless possibilities it creates for you and for our players."

With the CMA's approval, Microsoft is now cleared to acquire Activision Blizzard, a merger first announced in January 2022.

The deadline for completion is October 18. Microsoft was reportedly planning to complete as early as today.

The acquisition has already been approved in the EU and more than 40 other countries.

Microsoft and Activision Blizzard still face resistance from the US Federal Trade Commission, which is planning an internal administrative hearing.

However, the FTC does not have the power to directly block the deal. The hearing is also on hold until the Commission has completed its appeals process, arguing against a District Court decision that denied a preliminary injunction against the merger earlier this year.

You can read more about the regulatory hurdles Microsoft has faced in our extensive primer.