The UK's Competition and Markets Authority (CMA) has granted its approval for Microsoft to proceed with the acquisition of Activision Blizzard, following the initial blockage of the $68.7 billion deal earlier this year, primarily due to concerns related to competition in the cloud gaming sector.

To address these concerns, Microsoft proposed a modified agreement in which it would sell the cloud gaming rights for all of Activision Blizzard's titles, including future releases for the next 15 years, to an independent third party, Ubisoft. The CMA provisionally approved this deal two weeks ago.

In its final decision, the CMA emphasized that this sale of cloud gaming rights would prevent Microsoft from monopolizing the cloud gaming market and would preserve competitive pricing and services for UK cloud gaming customers. Furthermore, the CMA's decision allows Ubisoft to distribute Activision's games under various cloud gaming business models, including multi-game subscription services beyond Xbox Game Pass. It also permits other cloud gaming providers to use non-Windows operating systems for Activision's games.

However, the approval is conditional on the completion of the Ubisoft divestment agreement before the acquisition can proceed. While the CMA had some initial concerns about the modified deal, it now believes that Microsoft has provided sufficient undertakings to ensure the enforceability of the terms of the sale of Activision's rights to Ubisoft.

The CMA also conducted a public consultation to gather external opinions on the modified deal, including feedback from the public. However, the regulator noted that none of the received feedback sufficiently argued against the approval of the deal.

CMA's chief executive, Sarah Cardell, stated, "With the sale of Activision’s cloud streaming rights to Ubisoft, we've made sure Microsoft can't have a stranglehold over this important and rapidly developing market. As cloud gaming grows, this intervention will ensure people get more competitive prices, better services, and more choice."

The acquisition's completion deadline is set for October 18, and Microsoft had reportedly planned to finalize it as soon as today. Notably, the acquisition has already received approval in the European Union and more than 40 other countries.

Despite these approvals, Microsoft and Activision Blizzard still face resistance from the US Federal Trade Commission, which is preparing for an internal administrative hearing. However, the FTC does not have the authority to block the deal directly. The hearing has been put on hold while the Commission completes its appeals process as it argues against a District Court decision that denied a preliminary injunction against the merger earlier this year.

Source: James Batchelor, Editor-in-chief GameIndustry.biz