Competition watchdog to reopen talks with Microsoft on Activision merger

The decision comes after Microsoft agrees to halt legal appeal against the original ruling and restructure the deal

The Competitions and Markets Authority (CMA) is ready to reopen talks with Microsoft on its proposed merger with Activision Blizzard, in an apparent softening of its position on the $69 billion deal it blocked earlier this year.

Microsoft has stated that it will attempt to restructure the deal to allay the concerns of the CMA about its potential domination of the cloud gaming market. An appeal hearing was due to begin later this month.

A CMA spokesperson said: "In order to be able to prioritise work on these proposals, Microsoft and Activision have agreed with the CMA that a stay of litigation in the UK would be in the public interest and all parties have made a joint submission to the Competition Appeal Tribunal to this effect."

The change in stance on both sides of what was turning into a bitter dispute comes after a US judge ruled that the acquisition could proceed. The US competition watchdog, the Federal Trade Commission (FTC) had requested that the deal be blocked, citing similar concerns to the CMA about Microsoft buying exclusive access to Activision games such as Call of Duty and stopping those games being made available on other cloud gaming platforms, notably Sony and Nintendo.

However, Judge Jacqueline Scott Corley writing yesterday stated: "The FTC has not shown it is likely to succeed on its assertion the combined firm will probably pull Call of Duty from Sony PlayStation, or that its ownership of Activision content will substantially lessen competition in the video game library subscription and cloud gaming markets."

The FTC has expressed disappointment in this outcome and has indicated that it does not consider this matter to be closed. In contrast, Microsoft president Brad Smith was rather more upbeat.

Smith also indicated in a statement to The Verge that he has his sights trained on the CMA:

"After today's court decision in the U.S, our focus now turns back to the UK. While we ultimately disagree with the CMA's concerns, we are considering how the transaction might be modified in order to address those concerns in a way that is acceptable to the CMA."

Interestingly, the EU was first to green light the deal, announcing in May that it was satisfied with the commitments made my Microsoft about cross platform availability of popular games.