Microsoft makes new bid to unblock Call of Duty deal

Microsoft has made a new bid to buy Call of Duty-maker Activision Blizzard in the latest twist in the tale of what would be the biggest deal of its kind in the gaming industry.

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

Microsoft’s president Brad Smith said the new offer was “substantially different” and should be approved.

The UK Competition and Markets Authority (CMA) will review the deal but said: “This is not a green light.”

The offer, if approved, would end a tumultuous 18 months for Microsoft.

Since it announced plans to buy Activision Blizzard in January last year, the proposed merger has split regulators around the world, some of whom fear it could stifle choice for gamers.

The CMA will make a decision on Microsoft’s revised bid by 18 October – without its approval the deal cannot go ahead globally.

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

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

Mr Smith said: “Microsoft will not be in a position either to release Activision Blizzard games exclusively on its own cloud streaming service – Xbox Cloud Gaming – or to exclusively control the licensing terms of Activision Blizzard games for rival services.”

So far, it said its initial offer for Activision has been approved in 40 countries including the European Union and China.

The US Federal Trade Commission is continuing to try to block the deal in America but has been overruled several times by the courts.

However, the CMA blocked the tie-up in April, warning it would harm innovation and choice for gamers in the fast-growing cloud gaming business.

The move sparked an angry reaction from Mr Smith, who said it was “bad for Britain” and marked Microsoft’s “darkest day” in its four decades of working in the country.

It was also a blow for the UK government, which wants the country to become a tech powerhouse.

Image caption,

Activision also owns Candy Crush

Under the revised terms, Microsoft said that Ubisoft would supply Activision’s content “to all cloud gaming service providers including to Microsoft itself”.

Activision boss Bobby Kotick said the deal had been “a longer journey than expected” but that “nothing substantially changes” under the new bid.

“We will continue to work closely with Microsoft and the CMA throughout the remaining review process, and we are committed to help Microsoft clear any final hurdles as quickly as possible,” he said.

Microsoft wants to buy Activision to add more titles to its Xbox Game Pass streaming service.

Members pay a subscription fee to access a catalogue of games from the cloud.

However, rivals such as Sony have objected to the deal, concerned that Microsoft could stop major games being available to its own PlayStation business.

Modern Warfare 2, the latest instalment in the Call of Duty series, made $1bn in its release weekend, and more than half of all copies sold in the UK were for PlayStation.

For the Microsoft-Activision merger to work, it has to be approved by regulators in the UK, the US and the EU.

If the new bid goes ahead, it would also be a win for the CMA, which would have a fresh opportunity to approve the deal.

It has faced criticism for blocking the tie-up.

Sarah Cardell, chief executive of the CMA, said Microsoft’s new offer was “substantially different from what was put on the table previously”.

“We will carefully and objectively assess the details of the restructured deal and its impact on competition, including in light of third-party comments,” she said.

“Our goal has not changed – any future decision on this new deal will ensure that the growing cloud gaming market continues to benefit from open and effective competition driving innovation and choice.”

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