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UK allows Microsoft's Activision deal with token change over cloud gaming

The UK has reversed its ruling over Microsoft buying Activision, touting a trivial revision about cloud gaming that it claims to be a big deal.

Even Microsoft described the UK's Competition and Markets Authority (CMA) as having a "flawed understanding of this market and the way the relevant cloud technology actually works." But that grasp of the cloud may be what has led to the new deal being approved.

The UK now says that Microsoft can buy Activision, but the latter's cloud gaming rights must instead go to the independent firm, Ubisoft.

"With the sale of Activision's cloud streaming rights to Ubisoft, we've made sure Microsoft can't have a stranglehold over this important and rapidly developing market," said Sarah Cardell, Chief Executive of the CMA, in a statement. "As cloud gaming grows, this intervention will ensure people get more competitive prices, better services and more choice."

"We are the only competition agency globally to have delivered this outcome," she continued. "We delivered a clear message to Microsoft that the deal would be blocked unless they comprehensively addressed our concerns and stuck to our guns on that."

Cardell also criticized Microsoft and warned that other businesses should not emulate it. "[They] should be in no doubt that the tactics employed by Microsoft are no way to engage with the CMA."

"Microsoft had the chance to restructure during our initial investigation but instead continued to insist on a package of measures that we told them simply wouldn't work," she said. "Dragging out proceedings in this way only wastes time and money."

By giving up cloud streaming rights to get the deal, though, Microsoft has effectively lost little — or nothing. Cloud gaming is a small percentage of the overall market, and despite the CMA believing a risk that Microsoft could dominate, the company has only limited stake in cloud gaming.

The CMA did have other issues with the deal, as it identified "limited residual concerns." Still, it accepted Microsoft's "undertakings that will ensure that the terms of the sale of Activision's rights to Ubisoft are enforceable by the CMA."

While the UK originally blocked the deal, the European Union approved it in May 2023. Other countries also approved it, although the US Federal Trade Commission did try to prove such a deal would be anticompetitive.