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Microsoft submits fresh Activision merger proposal after CMA rejection

The takeover of the maker of Call Of Duty, World Of Warcraft and Candy Crush would be one of the biggest ever in the technology industry (Tim Ireland/PA) (PA Archive)
The takeover of the maker of Call Of Duty, World Of Warcraft and Candy Crush would be one of the biggest ever in the technology industry (Tim Ireland/PA) (PA Archive)

Microsoft has today sought to allay the concerns of the UK’s competition watchdog after it tabled a fresh proposal for its mega $69 billion Activision acquisition following a rejection of its initial deal.

Under the terms of the new proposal, Microsoft will not acquire the cloud streaming rights to all current and future Activision games released during the next 15 years, in a move which it said would address concerns set out by the Competition and Markets Authority.

The new deal provides an independent third-party content supplier, Ubisoft, with the ability to supply Call of Duty maker Activision’s gaming content to all cloud gaming service providers. Ubisoft will compensate Microsoft for the cloud streaming rights to Activision’s games through a one-off payment and through a pricing mechanism with an option that supports pricing based on usage.

Microsoft president Brad Smith said today in a blog post: “As a result of the agreement with Ubisoft, Microsoft believes its proposed acquisition of Activision Blizzard presents a substantially different transaction under UK law than the transaction Microsoft submitted for the CMA’s consideration in 2022.

“We believe that this development is positive for players, the progression of the cloud game streaming market, and for the growth of our industry.”

The CMA said it will begin a new investigation and the statutory deadline for a decision is 18 October 2023.

Sarah Cardell, Chief Executive of the CMA, said: “This is not a green light. We will carefully and objectively assess the details of the restructured deal and its impact on competition, including in light of third-party comments.

“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.”

Microsoft previously blasted the CMA over its decision to block its deal with Activision after a number of other major global regulators gave it unconditional approval.

“This decision, I have to say, is probably the darkest day in our four decades in Britain,” Microsoft president Brad Smith said in an interview with the BBC. “It does more than shake our confidence in the future of the opportunity to grow a technology business in Britain than we’ve ever confronted before.”

In a note to staff, Activision Blizzard CEO Bobby Kotick today said: “We welcome Microsoft’s decision to enter into this agreement and submit a new application to the CMA, which Microsoft believes will address the CMA’s concerns.

“This has been a longer journey than expected [but] our integration management team is hard at work to ensure we are prepared for a smooth close.”

Microsoft is understood to face a $3 billion break-up fee if the deal falls through.