Microsoft and UK Regulators Pause Activision Battle to Negotiate a Solution

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Microsoft’s acquisition of Activision Blizzard faces regulatory hurdles in the UK, leading to negotiations with the Competition and Markets Authority.

Microsoft and the UK’s Competition and Markets Authority (CMA) have decided to pause their legal battle concerning the proposed acquisition of Activision Blizzard. This move comes after Microsoft recently secured a victory against the US Federal Trade Commission (FTC), clearing the path for its RM319.97 billion deal with the game publisher.

In April, the CMA moved to block Microsoft’s acquisition, triggering a scheduled appeal process set to commence on July 28th. However, Microsoft and the CMA have now reached an agreement to halt the appeal temporarily in order to explore potential modifications to address the CMA’s concerns regarding cloud gaming.

Call of Duty Black Ops: Cold War by Activision Blizzard Microsoft
Call of Duty Black Ops: Cold War by Activision Blizzard Microsoft

Microsoft’s President, Brad Smith, expressed the company’s stance, stating, “While we ultimately disagree with the CMA’s concerns, we are considering how the transaction might be modified to address those concerns in a way that is acceptable to the CMA.” Smith further emphasized Microsoft and Activision’s commitment to working with the CMA, highlighting the joint submission made to the Competition Appeal Tribunal (CAT) requesting the litigation stay.

Details of the potential modifications, including a rumoured “small divestiture” as reported by CNBC, are yet to be disclosed. The CMA has confirmed its willingness to review any proposals from Microsoft that would restructure the transaction to alleviate the concerns outlined in its Final Report.

Both parties agree to temporarily halt legal proceedings to address concerns and explore possible modifications.

The final decision on the pause and negotiation process lies with the CAT. However, given the circumstances, it is highly likely that the request will be granted to allow both parties to engage in further discussions. Notably, the CMA attempted to delay Microsoft’s appeal during the FTC v. Microsoft hearing, but the CAT rejected this request, citing fairness and justice.

This turn of events provides an opportunity for Microsoft and the CMA to find a mutually beneficial solution that addresses the regulator’s concerns, particularly regarding cloud remedies for UK consumers. Reports from MLex last month indicated that Microsoft had been exploring alternative options to proceed with the acquisition despite the UK block, potentially involving excluding Activision’s operations in the UK. However, both parties now appear willing to negotiate to avoid a complicated and messy process.

Read Also: Microsoft Secures Victory in FTC Battle to Acquire Activision Blizzard

The temporary pause in legal proceedings reflects a willingness on the part of Microsoft and the CMA to engage in productive discussions to reach a resolution that satisfies all parties involved. By addressing the CMA’s concerns, Microsoft aims to navigate the regulatory landscape effectively and ensure the completion of its transformative Activision Blizzard acquisition.