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The UK Competition and Markets Authority (CMA) blocked Microsoft’s original Activision Blizzard takeover in April 2023 because it feared Microsoft could use Activision games to weaken competition in cloud gaming. The CMA later approved a restructured deal after cloud-streaming rights outside the European Economic Area (EEA) were placed with Ubisoft, an independent supplier. The approval was for that revised transaction—not the original terms.
Why was the CMA concerned about cloud gaming?
The CMA’s central concern was control over games that could help a cloud-gaming service attract users. Cloud gaming lets people play without buying an expensive console or gaming PC. If popular games became available only, or on better terms, through one provider, rivals could struggle to compete for players.
The CMA said Microsoft already had a strong position in cloud gaming through Xbox, Windows, Azure and Xbox Cloud Gaming. It estimated Microsoft held 60–70% of global cloud-gaming services in 2023 and said Microsoft might find it commercially beneficial to make Activision games—including Call of Duty, Overwatch and World of Warcraft—exclusive to its own service.
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The regulator’s concern was about the future shape of a developing market: control of important content could give Microsoft an advantage over competing cloud services before those services had a chance to grow. The CMA panel chair put the principle this way on 26 April 2023: “Cloud gaming needs a free, competitive market to drive innovation and choice.”
Why did the CMA reject Microsoft’s first remedy?
Microsoft’s original proposal was a ten-year behavioural remedy: rules governing which cloud platforms could offer Activision games and on what terms. The CMA concluded that the proposal did not adequately resolve its concerns and would leave the regulator overseeing detailed commercial arrangements in a fast-moving market.
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- Subscription coverage: The remedy did not sufficiently cover multigame subscription services.
- Operating systems: It did not adequately support cloud gaming on non-Windows operating systems.
- Terms of access: It standardised terms the CMA believed should be shaped by competition between providers.
- Enforcement: It risked generating disputes that would require ongoing regulatory supervision.
The CMA also considered the prospect that Activision content could benefit Game Pass subscribers. It decided that this benefit would not outweigh the potential competitive harm, including the possibility that Microsoft could raise Game Pass prices after adding Activision games. On 26 April 2023, it prohibited the original transaction, saying the proposed remedy had significant shortcomings.
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How did Ubisoft change the deal?
In the restructured transaction announced on 21 August 2023, Ubisoft became the independent supplier of Activision cloud-streaming rights outside the EEA. Ubisoft could offer those games directly to consumers or license them to cloud providers, including through buy-to-play and multigame subscription models. That shifted control of the relevant distribution rights away from Microsoft rather than relying only on Microsoft to follow a set of access rules.
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Microsoft also committed to porting Activision games to non-Windows operating systems and supporting emulators when requested. The CMA said the revised arrangement substantially addressed its concerns, subject to consultation and protections to make the commitments enforceable. Microsoft’s account said Ubisoft’s rights covered current and new Activision Blizzard PC and console games released over the following 15 years, with the rights lasting in perpetuity. Microsoft retained obligations in the EEA under its European Commission commitments.
| Issue | Original transaction and remedy | Restructured transaction |
|---|---|---|
| Who controlled cloud rights outside the EEA? | Microsoft would acquire Activision Blizzard; its proposed ten-year remedy regulated access to cloud platforms. | Ubisoft received the cloud-streaming rights as an independent supplier. |
| Could rival cloud providers obtain the games? | The CMA found the proposed remedy insufficient to address its concerns about access and terms. | Ubisoft could license the games to all cloud providers or offer them directly to consumers. |
| Subscription and non-Windows support | The CMA said multigame subscriptions and non-Windows operating systems were not adequately covered. | Ubisoft could license through buy-to-play and multigame subscription models; Microsoft committed to porting games to non-Windows systems and supporting emulators on request. |
| Duration and enforcement | A ten-year behavioural remedy risked disputes and ongoing CMA oversight. | Microsoft said Ubisoft’s rights covered games released over the next 15 years and lasted in perpetuity; the CMA required enforceability protections. |
| How was competition protected? | Primarily through behavioural rules governing Microsoft’s conduct. | By placing cloud distribution rights with an independent supplier, alongside Microsoft’s commitments. |
On 22 September 2023, CMA chief executive Sarah Cardell said: “The CMA’s position has been consistent throughout – this merger could only go ahead if competition, innovation, and choice in cloud gaming was preserved.” CMA senior director Colin Raftery described the proposal as “a new and substantially different deal” that kept cloud distribution of the games with Ubisoft rather than under Microsoft’s control.
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Did the UK eventually approve Microsoft’s Activision acquisition?
Yes—but only after the transaction was restructured. On 13 October 2023, the CMA granted consent for Microsoft to acquire Activision Blizzard excluding Activision’s non-EEA cloud-streaming rights. The original deal, which the CMA had prohibited, was not the deal ultimately approved.
Key dates in the UK investigation
| Date | What happened |
|---|---|
| July 2022 | The CMA launched its merger inquiry. |
| 15 September 2022 | The CMA referred the transaction for an in-depth Phase 2 investigation. |
| 8 February 2023 | The CMA provisionally found competition concerns. |
| 24 March 2023 | The CMA said the deal would not substantially lessen competition in UK console gaming, leaving cloud gaming as the live issue. |
| 26 April 2023 | The CMA prohibited the original transaction. The CMA described it as a $68.7 billion deal. |
| 21 August 2023 | Microsoft announced the restructured transaction involving Ubisoft’s cloud-streaming rights. |
| 22 September 2023 | The CMA said the revised deal substantially addressed its concerns, subject to consultation and enforceability protections. |
| 13 October 2023 | The CMA consented to the acquisition excluding Activision’s non-EEA cloud-streaming rights. |
The CMA set 26 April 2023 as the statutory deadline for its Phase 2 investigation. In describing the companies’ scale, it reported Microsoft global turnover of nearly £125 billion in financial year 2021 and Activision Blizzard global turnover of £6.3 billion, including more than £700 million in the UK.
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