The regulator reversed its previous decision to block the $69 billion deal, removing the final hurdle for one of the largest technology deals in history.

The decision was expected as the Competition and Markets Authority (CMA) had previously agreed to review Microsoft's proposal last month, alleviating concerns that the deal would harm competition and hurt gamers.

Xbox's parent company secured a decisive victory in acquiring Activision, the creator of the popular Call of Duty gaming franchise.

To address objections from the British regulator, the companies agreed to extend the initial deal deadline until October 18th. The approval also helps Microsoft avoid paying Activision a $4.5 billion breakup fee if the deal fails to close.

"The new deal will not allow Microsoft to stifle competition in the cloud gaming market, as this market evolves, maintaining competitive prices and services for UK customers," the regulator said in a statement released on Friday.

Microsoft President Brad Smith expressed gratitude for the "thorough review and decision." He added, "We have now cleared the last remaining hurdle to completing a deal that we believe will benefit players and the gaming industry worldwide."

Activision CEO Bobby Kotick also welcomed the news, saying, "We look forward to the opportunity to be part of the Xbox team."

Mission Accomplished?

Since announcing the deal in January 2022, Microsoft has received approval from antitrust authorities in over 40 countries. Of particular significance, the company secured approval from 27 European Union nations, agreeing to allow users and cloud gaming platforms to stream its games without paying royalties for ten years.

However, the deal faced resistance from British and American regulatory bodies concerned that it would restrict competition in the video game industry. Sony, the chief competitor, also feared the deal would limit PlayStation users' access to Call of Duty, a popular series of military shooters developed by Activision.

The US Federal Trade Commission (FTC) lost a legal battle seeking to halt the deal for the court to review, but the FTC is not giving up. They appealed the decision and last month filed a notice of intent to reinitiate litigation.

Meanwhile, the British regulator was the last significant obstacle to the deal. The CMA's approval came after Microsoft revised its proposal in August.

Under the restructured deal, Microsoft will sell French studio Ubisoft Entertainment the rights to stream cloud gaming beyond the European Union and three other European countries for all current and new Activision games released over the next 15 years.

British regulators initially blocked the deal in April, fearing Microsoft might not allow Activision games into the growing cloud gaming market, where players can bypass buying expensive consoles and stream games to their tablets or phones.

The UK regulatory body then took the unprecedented step of delaying its final decision.

One of the factors in the favorable decision was the EU's approval, obtained after Microsoft pledged to automatically license Activision games on cloud gaming platforms without royalty payments. Another "material change in circumstances" that needed to be considered, according to court documents, was the agreement Microsoft signed with Sony stating that Call of Duty would be available on PlayStation for at least ten years.