UK regulator extends deadline for probe

LONDON — The U.K. competition regulator on Friday said it is extending the deadline for its review of Microsoft‘s takeover of video game publisher of Activision Blizzard by six weeks.

The extension will give the watchdog more time to review proposals by the two parties to resolve its concerns after it paused a campaign to block the deal.

“The Inquiry Group has decided to extend by six weeks … as it considers that there are special reasons to do so. The revised period will therefore end on 29 August 2023,” the U.K. Competition and Markets Authority said Friday.

The British regulator has been a stalwart opponent of Microsoft’s $69-billion purchase of Activision Blizzard, inclusively blocking the deal in April over competition concerns in the nascent cloud gaming market.

The CMA appeared to soften its tone earlier in the week, signaling it was ready to resume discussions with the Redmond tech titan. That softened stance came after the U.S. Federal Trade Commission’s attempt to block the deal was slapped down by a judge.

“We stand ready to consider any proposals from Microsoft to restructure the transaction in a way that would address the concerns set out in our Final Report,” a CMA spokesperson told CNBC via email on Tuesday.

The CMA’s concerns have centered on the likelihood of Microsoft making Activision games exclusive to its own platform, as the tech giant sets its sights on the budding cloud gaming market — a technology that will effectively allow users to stream games on remote servers, like Netflix watchers do with a movie.

Microsoft’s multiple concession offers to the CMA has so far yet to bear fruit. These include deals to license some of Microsoft and Activision games to other cloud gaming providers. However, the CMA flat out rejected these proposals, effectively saying they were hard to enforce and wouldn’t do enough to protect competition in the cloud gaming market.

Now Microsoft and Activision will need to come up with new proposals that go further than that, in order to allay the CMA’s concerns. This coud include bolstered licensing deals or even a potential spinoff of its cloud gaming business in the U.K., analysts told CNBC.

In February, the CMA countered with a notice of potential remedies, which included selling its unit associated with the staple game Call of Duty and divesting some of the Activision Blizzard business. At the time, Microsoft said this was not feasible.

On Friday, Bloomberg reported, citing people familiar with the matter, that Microsoft could sell off some of its cloud-based market rights for games in the U.K. to other firms to appease the CMA.

The deal has also met with opposition in the U.S., but appeared to gain traction stateside earlier this week after the U.S. District Court for the Northern District of California pronounced in favor of the two companies. Since then, the U.S. Federal Trace Commission on Wednesday filed to appeal the decision to deny a request for a preliminary injunction, which would have prevented the transaction’s completion.