UK regulator the Competition and Markets Authority (CMA) has provisionally approved Microsoft's acquisition of Activision Blizzard.
The CMA blocked Microsoft's original proposal, prompting the tech giant to submit a restructured deal to address the regulator's cloud gaming concerns.
Those remedies included the transfer of Activision Blizzard's cloud gaming rights to French publisher Ubisoft for the next 15 years, preventing Microsoft from releasing Activision Blizzard titles exclusively on its own cloud streaming platforms.
Microsoft said the move would allow it to pitch a "substantially different transaction" at the CMA compared to the original proposal it submitted in 2022.
The CMA seems to agree, with the regulator suggesting Ubisoft will now replicate the role that Activision would have occupied in the cloud market as an independent player, going some way to address its initial misgivings.
"In contrast to the original deal, Microsoft will no longer control cloud gaming rights for Activision’s content, so would not be in a position to limit access to Activision's key content to its own cloud gaming service or to withhold those games from rivals," wrote the CMA in a press release.
"Unlike the remedies the CMA previously rejected, Ubisoft will be free to offer Activision's games both directly to consumers and to all cloud gaming service providers however it chooses, including for buy-to-play or multigame subscription services, or any new model for providing content that might emerge as the market develops.
"The deal with Ubisoft also requires Microsoft to port Activision games to operating systems other than Windows and support game emulators when requested, addressing the other main shortcoming with the previous remedies package."
Microsoft's cloud gaming deal with Ubisoft appears to win over UK regulator
The CMA has identified some "limited residual concerns" with the new deal, but it seems Microsoft's new proposal is a more palatable proposition.
CMA CEO, Sarah Cardell, welcomed the restructured deal but suggested the whole process would have been smoother if Microsoft had been more flexible during the regulator's initial investigation.
"The CMA's position has been consistent throughout—this merger could only go ahead if competition, innovation, and choice in cloud gaming was preserved. In response to our original prohibition, Microsoft has now substantially restructured the deal, taking the necessary steps to address our original concerns," said Cardell.
"It would have been far better, though, if Microsoft had put forward this restructure during our original investigation. This case illustrates the costs, uncertainty and delay that parties can incur if a credible and effective remedy option exists but is not put on the table at the right time."
Commenting on the news, an Activision Blizzard spokesperson told Game Developer the CMA's preliminary approval is "great news for our future with Microsoft."
"We’re pleased the CMA has responded positively to the solutions Microsoft has proposed, and we look forward to working with Microsoft toward completing the regulatory review process," they added.
The CMA has now opened a consultation on Microsoft's proposed remedies that will run until October 6, 2023.
Microsoft is hoping to conclude its merger with Activision Blizzard by October 18 and recently overcame a legal challenge from the FTC in the United States, paving the way for it to complete the buyout on home soil.