The CMA has approved the amended Microsoft – Activision – Ubisoft deal and cleared the path for Microsoft to finalize their acquisition of Activision Blizzard King.
The CMA shares this explanation of their decision in a press release titled “Microsoft concession a gamechanger that will promote competition”:
“In its original investigation, the CMA found Microsoft already held a strong position in relation to cloud gaming and blocked the deal.
The sale of Activision’s cloud streaming rights to Ubisoft will prevent the distribution of important, popular content – including games such as Call of Duty, Overwatch, and World of Warcraft – from coming under the control of Microsoft in relation to cloud gaming. The restructured deal substantially addressed the concerns that the CMA had following its original investigation, which concluded earlier this year.
The CMA did identify limited residual concerns with the new deal, but Microsoft gave undertakings that will ensure that the terms of the sale of Activision’s rights to Ubisoft are enforceable by the CMA.
The CMA consulted on these undertakings and is satisfied that this will provide the safety net needed to make sure this deal is properly implemented.”
In the CMA decision of the deal, the regulator investigated the different angles where this merger could harm competition. They came to the conclusion that Sony has no valid claim that the deal has to be blocked to protect their competitiveness.
The CMA realized that Sony cannot actually demand that Call of Duty games have to come to PlayStation, and subsequently, they could not demand that Call of Duty remain independent so that PlayStation and Xbox get equal footing to negotiate Call of Duty rights. Call of Duty is not that important to the industry, even if It makes Sony a lot of money. Subsequently, Sony is a big business with more than enough capability to make competitors to Call of Duty, or pursue their business without such a franchise.
The CMA’s objection to the deal came because of their concerns in relation to cloud gaming. Their assessment was that Microsoft had a headstart on cloud and cloud gaming technologies that put competitors at a disadvantage.
Microsoft’s remedy to this was to give up their cloud streaming rights for Activision’s games to Ubisoft, a complete third party who will now have full independence to sell or distribute these rights as they wish. Ubisoft is not part of the acquisition, but their position will be a safeguard to Microsoft from being too powerful.
It is now possible for Microsoft and Activision to close the deal as soon as a matter of hours. Both parties shared their intention to close the deal today, ominously on a Friday the 13th, this October. If they do get a touch of superstition, or something else comes up, they do still have until October 18, next Wednesday, to close this deal.