Microsoft launches new £60bn bid for Activision after UK regulators block deal

Microsoft has tabled a revised £60billion offer for Activision Blizzard in a bid to secure approval from UK regulators.

The US tech giant had to submit another bid for the video game group after the Competition and Markets Authority (CMA) blocked the original deal ‘to protect innovation and choice in cloud gaming’.

The watchdog’s initial decision to reject the merger in April sparked a furious backlash.

Microsoft branded it the ‘darkest day in four decades in Britain’ and Activision claimed the UK was ‘clearly closed for business’.

The Competition and Markets Authority (CMA) blocked the original deal, which covers all Activision games, including Call Of Duty shooter series, ‘to protect innovation and choice’

But the CMA yesterday stuck to its guns – forcing both companies into a rethink. And the watchdog said it would examine the latest proposals.

Under these updated arrangements, the rights to stream Activision games outside the European Economic Area (EEA) would be sold to French gaming firm Ubisoft Entertainment, the maker of such as the Assassin’s Creed series.

The deal covers all Activision games, including the highly lucrative Call Of Duty shooter series, as well as any new games released on PC or gaming consoles over the next 15 years.

The sale to Ubisoft would mean Microsoft would not control the rights for these games to be streamed online outside the EEA, which is made up of EU members and Iceland, Liechtenstein and Norway, but not the UK.

Games stored on the internet in the cloud, as opposed to in a computer hard drive or on a CD-ROM, allow users to buy and play content in a similar way to how TV shows and films are streamed over services such as Netflix.

It is expected to become a booming market for the gaming industry over the coming years, with fears Microsoft could dominate cloud gaming a key reason behind the CMA’s original decision to block the deal. 

Following Microsoft’s latest approach, CMA boss Sarah Cardell said the watchdog would open another investigation but stressed this was ‘not a green light’.

She added: ‘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.’

CMA boss Sarah Cardell said the watchdog would open another investigation 

Microsoft vice chairman and president Brad Smith said: ‘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 regulator now has until October 18 to decide whether to approve the terms of the merger, the same day on which Microsoft’s agreement with Activision expires. If the CMA refuses again, the deal is likely to collapse.

The CMA was forced on the defensive in April when its decision to reject the initial merger was met with a barrage of criticism. Activision said the UK was ‘clearly closed for business’ while mocking Prime Minister Rishi Sunak’s quest to make the UK the ‘world’s next Silicon Valley’.

And branding it the ‘darkest day in our four decades in Britain’, Microsoft’s Smith said: ‘The English Channel has never seemed wider.’

The CMA became increasingly isolated after EU regulators waved through the tie-up in May and in the US an attempt by the Federal Trade Commission to block the deal on the grounds it would lessen competition was thrown out by the courts.

Amid growing pressure, and the mismatch with other major economies, the CMA took the incredibly rare step of reconsidering its decision to block the merger. But it yesterday confirmed it has blocked the original deal and would examine the fresh proposal.

Alex Haffner, partner at law firm Fladgate, said the CMA’s new probe meant Microsoft and Activision potentially faced ‘another lengthy drawn out process’. 

But he added: ‘In reality, however, it is hard to believe Microsoft would have taken this new course without a high degree of confidence it will, in due course, finally get a regulatory green light from the CMA.’

This post first appeared on Dailymail.co.uk