Microsoft makes new deal to buy Call of Duty giant

Microsoft has submitted a new deal to buy Activision Blizzard after its original $69bn (£59bn) bid was rejected by the UK competition watchdog.

The Competition and Markets Authority (CMA) confirmed on Tuesday that Microsoft’s initial offer for the Call of Duty-maker had been blocked.

It will now review the new deal but said: “This is not a green light.”

Under the new offer Microsoft won’t buy the rights for Activision’s existing or new games stored in the cloud.

The pledge, which will last 15 years, will not cover Activision’s PC and console games in the European Economic Area.

Games stored in the so-called cloud allow players to buy content when they like, similar to a streaming service such as Netflix.

Microsoft’s deal to buy the Call of Duty maker, struck last year, was set to be the biggest of its kind in gaming industry history.

But it has split regulators around the world, some of whom fear it could be anti-competitive.

The US Federal Trade Commission continues to try to block the deal in America despite having been overruled several times by the courts.

The European Union and China meanwhile have said the tie-up can go ahead.

But the UK announced plans to block the deal 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 Activision, while Microsoft’s UK president Brad Smith said it was “bad for Britain” and marked Microsoft’s “darkest day” in its four decades of working in the country.

The UK’s move means the multi-billion dollar deal cannot go ahead globally.

Under the revised over, Microsoft said that instead of controlling all of Activision’s games, which also include Candy Crush, the content would be sold to rival video game publisher Ubisoft.

Ubisoft can then supply Activision’s content “to all cloud gaming service providers including to Microsoft itself”.

Microsoft makes the Xbox gaming console and wants to buy Activision to add more titles to its Game Pass streaming service. This allows gamers to download content to their consoles and mobile phones.

Rivals such as Sony have also 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.

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

She said the CMA would now examine the offer.

“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.”