Microsoft's Activision deal could face “new merger investigation,” UK regulator warns - The Verge

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The CMA stands by its final report and warns that negotiations with Microsoft are at an early stage and may trigger a new merger investigation.

By Tom Warren, a senior editor covering Microsoft, PC gaming, console, and tech. He founded WinRumors, a site dedicated to Microsoft news, before joining The Verge in 2012.

Illustration: Alex Castro / The Verge

The UK’s Competition and Markets Authority (CMA) is throwing caution over the idea of a quick resolution to its concerns around Microsoft’s proposed Activision Blizzard acquisition. Microsoft and UK regulators were extremely quick to issue statements over their intention to pause their Activision battle to negotiate after Microsoft won a key FTC legal fight yesterday. But now, the UK regulator says Microsoft’s proposals may “lead to a new merger investigation.”

In a statement to The Verge, supplied by CMA media officer Billy Proudlock, the regulator warns that the discussions with Microsoft are at an early stage:

Whilst merging parties don’t have the opportunity to put forward new remedies once a final report has been issued, they can choose to restructure a deal, which can lead to a new merger investigation. Microsoft and Activision have indicated that they are considering how the transaction might be modified, and the CMA is prepared to engage with them on this basis. These discussions remain at an early stage and the nature and timing of next steps will be determined in due course. While both parties have requested a pause in Microsoft’s appeal to allow these discussions to take place, the CMA decision set out in its final report still stands.

The CMA originally blocked the deal on cloud concerns earlier this year, but both Microsoft and the CMA are now willing to negotiate after Judge Jacqueline Scott Corley’s ruling on Tuesday. The CMA is making it clear that Microsoft won’t be able to rely on additional behavioral remedies, though. The regulator had originally favored a structural remedy for the console side of its concerns before eventually blocking the deal over cloud gaming competition concerns instead.

CNBC reported yesterday that Microsoft and the CMA have agreed on a “small divestiture” to address the cloud gaming concerns. CNBC doesn’t expand on what that divestiture could involve, but it will likely be specific to the UK and may be related to Microsoft’s Xbox Cloud Gaming services in the region.

EU regulators also had cloud gaming concerns but approved the deal earlier this year thanks to 10-year licensing deals that Microsoft has offered to cloud gaming competitors. The EU secured a key remedy that includes a free license to consumers in EU countries that would allow them to stream via “any cloud game streaming services of their choice” all current and future Activision Blizzard PC and console games that they have a license for. Cloud providers will also be offered a free license to stream these games.

MLex also reported last month that Microsoft was exploring options to close the deal despite the UK decision.

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2023-07-12 12:20:21Z
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