The Competition and Markets Authority (CMA), UK's antitrust regulator, has reaffirmed its April decision to prevent the $68.7 billion merger between Microsoft and gaming giant Activision Blizzard. This is despite Microsoft's claims that the watchdog should reverse its ruling due to changes in the industry since it was first issued.
Nonetheless, Microsoft has filed a revised application for review to the CMA, which was simultaneously announced on Tuesday, August 22.
Changes to the proposal would prevent the tech giant from acquiring cloud streaming rights to all existing and future Activision games published over the next 15 years outside of the European Economic Area (EEA). In its place, Microsoft will hand over the cloud streaming rights to Ubisoft before acquiring Activision.
Key Developments in Light of the Merger
According to TechCrunch, CMA's chief executive Sarah Cardell gave a brief summary of the situation in an interview earlier Monday. She stated, "We have [finalized] the legal order that prohibits the original deal between Microsoft and Activision. That deal cannot proceed."
In her statement, she also compared the new plan that Microsoft just proposed to the one the regulator has rejected and found to be "substantially different."
CMA's first impression of the updated plan is that it would open the door for a variety of business models, such as cloud-based multigame subscription services, buy-to-play, and others, to access Activision titles. It also suggests that, with the revised proposal, Activision's titles could be made accessible through cloud gaming services that run on operating systems other than Windows, such as Linux.
Now that it has all the information it needs, the regulator may spend several weeks conducting a Phase 1 inquiry and coming to a conclusion. Notably, today's CMA output has an optimistic tone.
If the scheme is approved, the CMA stipulates that Ubisoft would pay Microsoft for the right to stream Activision games in the cloud in exchange for a one-time payment and a market-based wholesale pricing model that allows for usage-based pricing.
A Revised Deal Could Lead to Something
Following the European Union's approval of the merger in May and the US Federal Trade Commission's (FTC) failed effort to sue and halt the agreement in the courts last month, the UK's competition body has found itself alone among major global regulators attempting to prevent the deal.
As reported last month, the CMA has hinted that a reworked deal may provide Microsoft and Activision a way out of the deadlock and lead to a new merger inquiry.
That new investigation is now underway, with a deadline to wrap up the study coming on the same day (October 18) that Microsoft and Activision have assigned themselves to finalize the transaction after agreeing to extend their own deadline last month.
