Microsoft's Activision Blizzard Acquisition Faces UK Regulatory Hurdles

Microsofts revised acquisition of Activision Blizzard faces prolonged scrutiny by the UKs CMA, despite proposed solutions. A $4.5 billion deadline looms, leaving gamers in suspense.

As the countdown to Microsoft's impending deadline for its extended buyout agreement with Activision Blizzard approaches, the UK's Competition and Markets Authority (CMA) appears to have maintained a conspicuous silence regarding its stance on the revised acquisition proposal.

Not long after Microsoft secured a victory over the US Federal Trade Commission by overcoming a preliminary injunction against its bid to acquire Activision Blizzard, the CMA, which had previously opposed the deal globally, decided to reevaluate its position due to an appeal filed with the UK's Competition Appeal Tribunal.

Just when it seemed that Microsoft might have revived its prospects concerning the UK markets following a critical examination of the CMA's initial review process, the company introduced a significant alteration to its original proposal. This modification involved the transfer of Activision's cloud streaming licensing business to Ubisoft.

Since the proposal to make Ubisoft the custodian of Activision Blizzard's streaming rights, the CMA has surprisingly chosen to remain tight-lipped about the ongoing reevaluation of Microsoft's adjusted acquisition plan. Fortunately, someone has been diligently tracking these developments.

Florian Mueller, a journalist and resident expert in online patents, has diligently kept the public informed about the intricate legal proceedings unfolding between Microsoft and the CMA in recent months, as the deadline for Microsoft's augmented breakup fee with Activision looms closer next month.

Mueller's latest thread on Twitter (sometimes humorously referred to as "X") dissects the legal intricacies that have transpired during the latter stages of this reevaluation process. He highlights how the Competition Appeal Tribunal (CAT) viewed the CMA's initial analysis of the deal as flawed, particularly in relation to its arguments regarding potential harm to the console market.

Moreover, Mueller suggests that the reevaluation process may be more procedural than substantive since Microsoft appears to have presented a solution to the CMA's primary concern—namely, the impact of the deal on the cloud streaming market.

With the CAT compelling the CMA to revisit its assessment of Microsoft and Activision's proposed acquisition, the CMA has now taken nearly 57 days to complete its phase 1 reevaluation. Many anticipate a verdict shortly before the looming October 18, 2023 deadline. Missing this deadline would entail Microsoft paying a hefty $4.5 billion in compensation to Activision for failing to expedite its takeover.

Despite Microsoft's decision to divest its interest in streaming licenses for Activision Blizzard titles, many believed this would be sufficient to appease the CMA and expedite the review process. However, the regulatory body seems intent on prolonging its evaluation, potentially until the eleventh hour or beyond.

With no further official communications disclosed between the CMA and Microsoft, the outcome remains uncertain, and gamers find themselves in a state of suspense as the $4.5 billion deadline draws ever closer.

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