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LONDON — Microsoft has been forced to restructure its takeover of Activision and renotify it to the United Kingdom’s Competition and Markets Authority (CMA) after the watchdog confirmed its earlier decision to block its $69 billion takeover of the video-gaming giant.
In a press release on Tuesday, the CMA said it had rejected Microsoft’s plea to revisit its original decision to block the merger.
Instead, Microsoft has submitted a new, restructured deal for the British watchdog to review, under which Microsoft will sell the rights to stream existing and new Activision PC and console games to rival French game maker Ubisoft. The rights Ubisoft will acquire outside of the European Economic Area will be exclusive.
“Under the restructured transaction, Microsoft will not be in a position either to release Activision Blizzard games exclusively on its own cloud streaming service — Xbox Cloud Gaming – or to exclusively control the licensing terms of Activision Blizzard games for rival services,” Microsoft said in a blogpost.
Microsoft president Brad Smith said the new deal, which now includes a one-off payment from Ubisoft for the rights, “presents a substantially different transaction under U.K. law.”
“This is not a green light,” Sarah Cardell, chief executive of the CMA, said in a statement. “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.”
The deadline for the first phase of the CMA’s review of the new deal is October 18, the same date Microsoft and Activision must close their merger by.
Activision CEO Bobby Kotick said: “We will continue to work closely with Microsoft and the CMA throughout the remaining review process and we are committed to help Microsoft clear any final hurdles as quickly as possible.”
The CMA — which blocked the initial deal in April following an in-depth probe — had faced pressure to look at the deal again after the European Commission approved the merger and the U.S. Federal Trade Commission lost its own bid to block it.
Microsoft argued last month that both decisions, as well as an agreement with Sony to allow Activision’s popular “Call of Duty” series to continue to be accessed on Sony’s Playstation console, constituted a “material change of circumstances” that merited the CMA to reverse its April veto. The CMA rejected this reasoning.
It remains to be seen if Microsoft and Activision will now have to renotify the restructured deal to other global regulators, but Microsoft said the new deal had been structured to ensure it can “honor fully its legal obligations under its commitments to the European Commission.” A spokesperson for the Commission said it is “carefully assessing whether the developments in the U.K. require another notification” to the EU regulator.
