A Ubisoft sale clears the final obstruction for the Microsoft-Activision merger

It now appears clear that Microsoft will be able to complete its $68.7 billion acquisition of Activision Blizzard within the next month. Competition and Markets Authority, the U.K. antitrust body remained the regulatory holdout with the legal authority to block the deal, says its concerns have been substantially addressed by Microsoft’s latest proposal.

Microsoft has handed the CMA a major concession: the cloud gaming rights to all of Activision Blizzard’s games will be carved out and sold separately to Ubisoft. Microsoft will still theoretically be able to put Activision Blizzard games on its own cloud gaming service, but despite owning the games, it will have to go to Ubisoft and bid for those rights like any of its competitors in the space — and it won’t be able to withhold them from other services.

The CMA, which was worried about the deal’s potential to close out competition in the nascent cloud gaming market, seems satisfied. “The prior sale of the cloud gaming rights will establish Ubisoft as a key supplier of content to cloud gaming services, replicating the role that Activision would have played in the market as an independent player,” it said.

The CMA’s decision is provisional, and its final approval is still subject to working out a few kinks with Microsoft. But it now seems certain that the CMA will give the deal an official green light before the extended deal deadline of Oct. 18 set by Microsoft and Activision Blizzard. It looks like Microsoft will finally own Call of Duty, World of Warcraft, and Candy Crush within the next few weeks — and can begin considering which of Activision Blizzard’s games to add to its Game Pass subscription service.

Microsoft’s willingness to carve out cloud gaming rights is perhaps surprising, but it indicates the lingering uncertainty over a sector that hasn’t taken off as many in the industry expected it to. It also illustrates how much value Microsoft places on parts of the Activision Blizzard portfolio that aren’t relevant to cloud gaming — particularly the foothold in mobile gaming offered by Candy Crush maker King.

“We are encouraged by this positive development in the CMA’s review process,” Microsoft president Brad Smith said on Twitter/X. “We presented solutions that we believe fully address the CMA’s remaining concerns related to cloud game streaming, and we will continue to work toward earning approval to close prior to the October 18 deadline.”

“This is a significant milestone for the merger and a testament to our solutions-oriented work with regulators,” Activision Blizzard CEO Bobby Kotick said in a public note to the company’s staff. “I remain optimistic as we continue the journey toward completion and am very grateful to each of you for your dedication and focus throughout this process.”

In the U.S., the Federal Trade Commission continues its appeal against a court decision that it should not be allowed to block the merger — a legal process that resulted in an enormous leak of confidential Microsoft documents this week — but it is not expected to succeed.

Call of Duty on Game Pass in time for the holidays? It’s looking possible.