Microsoft appears to be one step closer to closing its $69 billion acquisition of game publisher Activision Blizzard.
The UK's Competition and Markets Authority says Microsoft has remedied the regulatory issues laid out earlier in the year, according to a press release Friday. The regulator said the Xbox-maker's decision last month to sell cloud streaming rights for Activision Blizzard games to Ubisoft had addressed the concerns that the acquisition would create an anti-competitive video game market.
While Friday's news wasn't an approval of the deal, the CMA says it's "consulting on the remedies before making a final decision."
Microsoft first revealed plans to acquire Activision in January 2022. Closing the deal would turn Microsoft into one of the top three video game publishers in the world, right behind rival Sony. Activision Blizzard is one of the largest third-party publishers, with some major franchises that would give a much-needed boost to Microsoft's games catalog, including Call of Duty, Candy Crush and Overwatch.
Oct. 18 is the date Microsoft set to finalize its deal with Activision. The two companies moved the deadline to October from the original date of July 18, allowing more time to get approval from regulators. If the deal isn't completed, there's a termination, or "breakup," fee that's to be paid by Microsoft to Activision. The fee was originally set at $3 billion but went up to $3.5 billion on Aug. 29 and then $4.5 billion on Sept. 15.
Though Microsoft has won a few merger-related battles, it still has hurdles to clear. Here's what you need to know about the deal and what it means for gamers.
Who's left to approve the deal?
The CMA still has yet to approve Microsoft's purchase of Activision Blizzard, but Friday's statement does give the appearance that it will happen soon. Back in April, the CMA blocked the $69 billion deal, saying it would result in higher prices and fewer choices for gamers.
In the US, the Federal Trade Commission has opposed the deal, saying the acquisition would hurt competition within the video game industry. But so far, its challenges have been unsuccessful.
A federal judge in early July declined to issue a preliminary injunction that would've paused the deal. The FTC was attempting to temporarily halt the merger until a separate, in-house administrative law proceeding played out. Microsoft's court battle with the FTC continues as evidenced by a leak of company documents on Sept. 19 that showed plans for a discless Xbox Series X, a new Xbox console in 2028 and a memo from Xbox boss Phil Spencer detailing support from the company's board of directors for the purchase of Nintendo.
Microsoft has continued to deny that the deal would hamper competition within the video game industry. It's already received approval from the EU, China, Japan and other major countries.
What does this deal mean for gamers?
For Xbox Game Pass subscribers, a merger would mean Activision Blizzard's catalog of games would be incorporated into the service, likely similar to how Bethesda games were when Microsoft acquired that company in 2020.
How gamers who don't have an Xbox, and instead use a Sony PlayStation or Nintendo Switch console, would be affected is less clear.
Critics of the deal are concerned that Microsoft could make future games developed by Activision unavailable on rival consoles, although the Ubisoft deal does offer a way to bring Activision games to the PlayStation platform via Ubisoft Plus.
Much of the concern surrounds Activision's Call of Duty series, which is one of the bestselling games every year. Microsoft already agreed to a 10-year deal with Nintendo to bring Call of Duty games to its consoles, but Sony reportedly rejected a similar agreement when presented with it last year. However, Xbox boss Phil Spencer said on July 16 that Microsoft and Sony agreed to a 10-year "binding agreement" to keep Call of Duty on the PlayStation platform. It's unclear if the newest arrangement was different to what Microsoft offered Sony last year.
Earlier this year, Microsoft made a 10-year agreement with Nvidia that ensures Nvidia's cloud gaming platform GeForce Now continues to have access to games from both Microsoft and Activision.
Microsoft is using these agreements with its competitors to show regulators that there won't be a lack of competition in the video game industry.