According to Bloomberg News, people familiar with the matter revealed that Microsoft and Activision Blizzard are considering giving up some control of their cloud gaming business in the UK in order to appease regulators’ concerns, hoping to do so on July 18. The US$69 billion merger and acquisition transaction between the two parties was completed before the agreement deadline of 2019.
That would require selling some of its interests in the UK cloud gaming market to a telecommunications, gaming or cloud computing company, the people said. It is reported that a private equity firm may also be interested in purchasing this part of the equity.
Microsoft and Activision Blizzard still think it’s possible to meet the deadline to complete the largest merger ever in the video game industry, people familiar with the matter said. The deal made significant progress on Tuesday when a U.S. judge rejected an injunction request from the U.S. Federal Trade Commission (FTC).
Microsoft is re-opening talks with the UK’s Competition and Markets Authority (CMA), which had previously explicitly opposed the deal in May. The CMA said on Tuesday that they planned to review the proposal from Microsoft, but also revealed that the two companies would need to resubmit their deal applications in order to restart the regulatory review that typically takes months.
Separately, the FTC filed Thursday seeking U.S. District Judge Jacqueline Scott Corley to bar Microsoft from completing the deal while she appeals. This move will also make it more difficult for both parties to complete the transaction as soon as possible.
British regulators had previously worried that adding Activision Blizzard’s content to Microsoft’s xCloud service could limit the fledgling cloud gaming market. Microsoft offers xCloud to users as part of a gaming subscription service. The CMA has stated that they strongly prefer structural remedies such as divestitures over behavioral remedies. Because once behavioral remedial measures are taken, CMA must devote energy to supervising whether relevant companies abide by their commitments.
Spokespeople for Microsoft and Activision Blizzard declined to comment.
