The Albany Gazette - Microsoft submits new Activision deal to UK regulator

Xbox-owner Microsoft launched a bid for Activision Blizzard early last year, seeking to establish the world's third biggest gaming firm by revenue after China's Tencent and Japan's PlayStation maker Sony.

But the $69 billion deal for the purchase of the owner of game titles including Call of Duty, World of Warcraft and Candy Crush has faced significant scrutiny by regulators.

Britain's Competition and Markets Authority (CMA) said it has "opened a new phase 1 investigation into a new, restructured deal by Microsoft to buy Activision".

It added that the new deal follows confirmation by the regulator that "the original deal would be blocked to protect innovation and choice in cloud gaming".

Under the new proposed deal "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 (this excludes the European Economic Area)," the CMA said.

Instead these rights will be divested to French game developer Ubisoft Entertainment prior to Microsoft's acquisition of Activision, according to the CMA.

Ubisoft will in particular have "the ability to supply Activision's gaming content to all cloud gaming service providers (including to Microsoft itself)".

"This will allow gamers to access Activision's games in different ways, including through cloud-based multigame subscription services," Sarah Cardell, the CMA chief executive, said.

- Confidence -

Cardell added that "this is not a green light".

"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," she said.

The new deadline for the review is October 18.

The launch of a new investigation "leaves the merging parties open to the prospect of another lengthy drawn-out process to deal with competition concerns raised," said Alex Haffner, competition partner at UK law firm Fladgate.

"However, it is hard to believe Microsoft would have taken this new course without a high degree of confidence it will now in due course (finally) get a regulatory green light from the CMA," Haffner added.

Microsoft and Activision have said they remain firmly committed to the deal and have agreed to give themselves until October 18 to complete the transaction.

The European Union had cleared the deal in May while the US antitrust regulator in late July paused its attempt to block the buyout following a setback in court.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said the divestment to Ubisoft aims "to stop Microsoft making big hits like Call of Duty exclusive to its platforms".

"With other barriers to the deal in the EU and the US now overcome, Microsoft is eyeing up the home stretch, but there is no guarantee another obstacle won't be hurled in its path," she added.

(A.Berg--BBZ)