UK clears Microsoft Activision deal; removes last hurdle to gaming deal

Microsoft's purchase of video game maker Activision Blizzard won final approval Friday from Britain's competition watchdog, reversing its earlier decision to block the $69 billion deal and removing a last obstacle for one of the largest tech transactions in history.

The Competition and Markets Authority's blessing was expected after it gave preliminary approval last month to a revamped Microsoft proposal meant to address concerns that the deal would harm competition and hurt gamers.

It signals certain victory in the Xbox maker's quest to acquire Activision, maker of the popular Call of Duty game franchise.

The companies had agreed to extend an original mid-July deadline to October 18 to overcome the British regulator's objections. The approval also helps Microsoft avoid paying Activision a $4.5 billion penalty if the deal doesn't close.

The new deal will stop Microsoft from locking up competition in cloud gaming as this market takes off, preserving competitive prices and services for UK cloud gaming customers, the watchdog said.

Microsoft President Brad Smith said the company was grateful for the thorough review and decision.

We have now crossed the final regulatory hurdle to close this acquisition, which we believe will benefit players and the gaming industry worldwide, he said.

Activision CEO Bobby Kotick also welcomed the news: We look forward to becoming part of the Xbox Team.

Since the deal was announced in January 2022, Microsoft has secured approvals from antitrust authorities covering more than 40 countries. Crucially, it got a thumbs-up from the 27-nation European Union after agreeing to allow users and cloud gaming platforms to stream its titles without paying royalties for 10 years.

But the deal faced resistance from British and American regulators who worried it would stifle competition in the video game industry. Top rival Sony also feared it would limit PlayStation gamers' access to Call of Duty, Activision's long-running military shooter series.

The US Federal Trade Commission lost a court bid to pause the deal so that its in-house judge could review it. The FTC has not given up, appealing the decision and last month filing notice of its plan to resume that trial. That signals the US regulator's intention to unwind the deal even after it closes.

In the meantime, the UK regulator was the last major obstacle to the transaction going through. The CMA's approval came after Microsoft updated its offer in August.

Under the restructured deal, Microsoft will sell off cloud streaming rights outside of the EU and three other European countries for all current and new Activision games released over the next 15 years to French game studio Ubisoft Entertainment.

British regulators had initially blocked the transaction in April over concerns Microsoft could withhold Activision titles from the emerging cloud gaming market, where players can avoid buying pricey consoles and stream games to their tablets or phones.

Then, in an unprecedented move, the UK watchdog delayed its final decision, saying it needed to reconsider and agreeing with Microsoft to put appeal proceedings on hold.

One factor was the EU's approval, granted after Microsoft promised to automatically license Activision titles royalty-free to cloud gaming platforms. Another material change of circumstance that the watchdog said it needed to consider, according to court documents, was an agreement Microsoft signed with Sony to make Call of Duty available on PlayStation for at least 10 years.