Microsoft's new Call of Duty deal set for approval

Image source, Activision

The UK's competition watchdog has said Microsoft's revised offer to buy the Call of Duty maker Activision Blizzard "opens the door" to the deal being cleared.

The Competition Markets Authority (CMA) said the updated deal appeared to address concerns it had raised.

Under the new proposals, Microsoft will not buy the cloud gaming rights owned by Activision Blizzard.

Its original $69bn (£59bn) deal was blocked by UK regulators.

Earlier this year, the CMA blocked Microsoft from taking on the whole of Activision over concerns that the deal would harm competition in cloud gaming in the UK.

Microsoft then submitted a restructured deal for the competition watchdog to look at last month.

In a statement on Friday, the CMA's 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."

A consultation will be opened before a final decision on the deal is taken.

If it receives final approval, it will bring to an end a tumultuous year-and-a-half for Microsoft.

Since it announced plans to buy Activision Blizzard in January last year, the merger has split regulators around the world.

Ms Cardell added: "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."

Under the new deal, Microsoft has agreed to transfer the rights to stream Activision games from the cloud to the French video games publisher Ubisoft for 15 years.

The sale to Ubisoft of this portion of Activision's business will mean the cloud streaming of games like Call of Duty, Overwatch and World of Warcraft will not come under Microsoft's control.

Microsoft still hopes the merger will boost demand for its Xbox console and its gaming subscription business.

Its vice chairman and president Brad Smith said it was "encouraged" by this positive step.

"We presented solutions that we believe fully address the CMA's remaining concerns related to cloud game streaming, and we will continue to work toward earning approval to close prior to the 18 October deadline."

The CMA will make a final decision on Microsoft's revised bid in October - without its approval the deal cannot go ahead globally.

It said on Friday that while it still had "limited residual concerns", the revised deal was "new and substantially different, which keeps the cloud distribution of these important games in the hands of a strong independent supplier, Ubisoft, rather than under the control of Microsoft".

Activision said that the preliminary approval was "great news" for its future with Microsoft.

"We look forward to working with Microsoft toward completing the regulatory review process," it added.