Microsoft (NASDAQ:MSFT)'s $75 billion bid to acquire Activision Blizzard (NASDAQ:ATVI) has taken a significant step forward, following approval from the UK's Competition and Markets Authority (CMA) on Friday. The regulatory body had initially blocked the deal due to concerns over potential stifling of innovation and choice in the cloud gaming sector.
In response, Microsoft proposed a revised agreement that includes selling the non-European streaming rights of Activision games to Ubisoft, the publisher of Assassin's Creed. This move is aimed at addressing the CMA's concerns about Microsoft consolidating its dominant position in the cloud gaming market.
The CMA stated that this arrangement would prevent key Activision content, such as popular games like Call of Duty and World of Warcraft, from being monopolized by Microsoft. By allowing Ubisoft, an independent entity, to acquire the cloud streaming rights for Activision's games, the revised agreement is expected to maintain healthy competition in the maturing cloud gaming market.
In addition to this restructuring, Microsoft has made several other agreements as part of its strategy to finalize the merger. This includes a decade-long contract with Sony (NYSE:SONY) to ensure the continued availability of Activision’s Call of Duty games on PlayStation consoles. To secure approval from the European Commission, Microsoft also agreed to license Activision’s games to rival cloud gaming services.
Despite these advancements, the deal has not yet been fully finalized. Microsoft has proposed solutions to address remaining issues raised by the CMA, which will be deliberated upon until October 6th. However, it is increasingly likely that the merger will be finalized before the companies' self-imposed deadline of October 18th.
Ahead of market opening on Friday, shares in Microsoft increased by 0.5%, while Activision’s stock indicated a rise of 1.8%. Ubisoft shares also experienced a surge of 3.6% during initial European trading.
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