Microsoft Corp. and Activision Blizzard Inc. are considering giving up some control of their cloud-gaming business in the UK as a way to appease regulators so they can complete their $69 billion merger by the July 18 deadline, according to people familiar with the matter.
That could involve selling off the cloud-based market rights for games in the UK to a telecommunications, gaming or internet-based computing company, said the people, who asked not to be named discussing confidential planning. A private equity company might also be interested, said one person.
Both companies still think it’s possible to close the deal, which would be the largest ever in the video-game industry, before next week’s deadline, the people said. They got a step closer on Tuesday, when a US judge declined the Federal Trade Commission’s request to pause the deal.
The software giant is re-engaging in talks with the UK Competition and Markets Authority, which had vetoed the deal in May. The CMA said Tuesday it’s prepared to evaluate proposals from Microsoft, but the agency also said the companies would need to resubmit their transaction for the normally multi-month regulatory process to begin anew.
Also complicating the companies’ push for a speedy resolution was the FTC’s request Thursday that US District Judge Jacqueline Scott Corley bar Microsoft from closing the deal while the agency appeals her ruling greenlighting the transaction. Corley has held up the deal’s completion until 11:59 p.m. Friday in San Francisco.
In its earlier decision, the UK regulator had expressed concerns that adding Activision content to Microsoft’s xCloud service would restrict competition in the nascent market for video games that are streamed over the internet rather than downloaded to consoles or devices. Microsoft offers xCloud as part of a monthly gaming subscription. The CMA has said it strongly prefers structural remedies like a divestiture to behavioral ones, under which the agency must monitor whether a company complies with its promises.
Spokespeople for Microsoft and Activision declined to comment.
CNBC reported earlier that Microsoft had offered a small divestiture to regulators, without specifying what might be sold.
Author: Leah Nylen, Ed Ludlow and Dina Bass
