The U.K. just placed huge hurdles in the way of Microsoft’s $69 billion Activision Blizzard buy—but that doesn’t mean the deal is dead

The U.K.’s antitrust regulator, the Competition and Markets Authority (CMA), today laid out what it sees as blockers to the deal’s completion. The CMA thinks Microsoft would unjustly benefit from being able to make Activision games exclusive to its own Game Pass cloud gaming service and would get an even stronger position in that sector, of which it already has a 60% to 70% market share. The watchdog also warned that Microsoft could use Call of Duty exclusivity to boost Xbox console sales and harm Sony’s rival PlayStation platform. In short, gamers would suffer from reduced competition.

So far, so familiar. This is pretty much what the U.S. Federal Trade Commission (FTC) complained about when it sued to block the deal in December, and what the European Commission reportedly laid out in a “statement of objections” (a kind of European antitrust charge sheet) a week ago.

However, the British regulator has gone a step further, by proposing potential solutions (or “remedies” in antitrust-speak) to the problems it identified. The CMA indicated it would prefer so-called structural remedies in this case, meaning a breakup. Microsoft might have to get rid of part of the Activision Blizzard business—either Call of Duty specifically, or the wider Activision unit, or the Activision and Blizzard units together (which would leave Candy Crush–maker King, along with the e-sports and motion-picture units). Or the CMA could just block the merger wholesale.

None of that sounds terribly appetizing for Microsoft. However, it would be a mistake to see today’s developments as necessarily being the death of the deal.

For one thing, remedy notices like these are supposed to be, in the CMA’s words, “a starting point for discussion” with Microsoft, Activision Blizzard, and their customers and competitors. The authority is open to comments for the next two weeks—its final decision is due late April—and it says it will opt for “the least costly and intrusive remedy that it considers to be effective.”

Neither Microsoft nor Activision Blizzard has actually proposed its own remedies, the CMA added. That’s not quite how Microsoft sees it—the tech giant has been loudly touting the fact that it’s committed to granting competitors a decade’s worth of “100% equal access” to Call of Duty titles, and today Microsoft’s deputy general counsel Rima Alaily insisted that this would “address the CMA’s concerns.”

“When we say equal, we mean equal,” Alaily said in an emailed statement. “Ten years of parity. On content. On pricing. On features. On quality. On playability.”

The British regulator is not oblivious to Microsoft’s argument, and, while it doesn’t think this sort of “behavioral” commitment can be the primary solution, it said it will also consider it as “a possible remedy.” So, stay tuned.

A final word regarding Activision Blizzard CEO Bobby Kotick’s media tour just ahead of the CMA’s provisional decision: I’m not sure it’s the smartest thing to accuse the regulator you’re trying to charm of “being co-opted by the FTC ideology and not really using independent thought,” or to claim—after they’ve just spent five months polling the industry and reviewing millions of internal Microsoft and Activision documents—that they’re “confused.”

So far, the CMA is the only one of the big antitrust regulators to suggest a way through this. Especially as it’s extremely tricky to appeal a CMA divestiture decision—just ask Meta—playing nice might be the better option.

Want to send thoughts or suggestions to Data Sheet? Drop me a line here.

David Meyer

Data Sheet’s daily news section was written and curated by Andrea Guzman. 

NEWSWORTHY

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FOOD FOR THOUGHT

She was the blueprint. Claire Hughes Johnson, a former Google vice president, built an instruction manual on how she works so that her team could get the most from her. When she joined Stripe, she encouraged new hires to write one, too. The practice of building this guide inspired her new book, Scaling People. She talked with Fortune about how her book can help with personal growth and make your preferences known in the workplace.

From the article: 

The aim of this exercise is to make an “implicit set of preferences explicit to people,” Johnson adds. This can get really granular, even to the point of detailing how long it takes you to review documents or whether you don’t like to be contacted on your personal number.

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BEFORE YOU GO

Coping with aftershocks. Laid-off workers are using social media to get support and navigate unemployment. Some are using TikTok to show their life before and after layoffs. And ex-Googlers have banded together on a Discord server where they’re sharing advice on severance and setting up mock interviews to help one another find their next job. “It gave us a way to at least communicate with our teams, but also each other, to figure things out and to have some connection,” a former Google worker told Insider.