Britain finally cleared Microsoft's (MSFT.O) $69 billion acquisition of Activision Blizzard (ATVI.O) on Friday after it forced the Xbox owner to sell the steaming rights to games including "Call of Duty" to address its competition concerns.
But the regulator ripped up its play book by reopening the case after Microsoft agreed to sell the streaming rights to Activision's games to Ubisoft Entertainment (UBIP.PA), with remedies to ensure the terms were enforceable.
The deal was the biggest test of the CMA's global power to take on the tech giants since Britain left the European Union.
It said "sticking to its guns" in the face of criticism from the merging companies had delivered an outcome that was better for competition, consumers and economic growth.
The approval paves the way for Microsoft to close the deal by Oct. 18 after it extended the deadline to secure UK approval.
The CMA said Microsoft's concession on streaming was a "gamechanger", adding that it was the only competition agency globally to have delivered this outcome.
"The new deal will stop Microsoft from locking up competition in cloud gaming as this market takes off, preserving competitive prices and services for UK cloud gaming customers," it said in a statement.
Microsoft announced the deal in early 2022, aiming to boost its growth in console, mobile, PC, and cloud gaming to compete with the likes of Tencent as well as PlayStation-owner Sony.
The U.S. Federal Trade Commission opposed the deal but after failing to stop it, the CMA was left standing alone.
The FTC is fighting on, but Microsoft has said it will not stop it closing the deal.
The European Commision gave the green light in May when it accepted Microsoft's commitments to license Activision's games like "Overwatch" and "World of Warcraft" to other platforms.
'STUCK TO OUR GUNS'
The CMA's block in April drew fury from the merging parties, with Microsoft saying that Britain was closed for business.
The British government only offered limited support to the CMA, with the Finance Minister Jeremy Hunt saying that while he did not want to undermine its independence, regulators also needed to focus on encouraging investment.
CMA Chief Executive Sarah Cardell said the regulator had "delivered a clear message to Microsoft that the deal would be blocked unless they comprehensively addressed our concerns and we stuck to our guns on that."
She said the CMA took its decisions "free from political influence" and it would not be "swayed by corporate lobbying".
"Businesses and their advisers should be in no doubt that the tactics employed by Microsoft are no way to engage with the CMA," she said.
"Microsoft had the chance to restructure during our initial investigation but instead continued to insist on a package of measures that we told them simply wouldn't work."
Quilter Cheviot equity analyst Ben Barringer said the CMA would see it as a victory, but it would need to be careful not to over-regulate the tech sector.
"There are fears the UK is a bad place to do business and the tech industry in particular will be watching its moves closely," he said.
Microsoft said it was "grateful for the CMA's thorough review and decision".
"We have now crossed the final regulatory hurdle to close this acquisition, which we believe will benefit players and the gaming industry worldwide," Vice Chair and President Brad Smith said.
Activision Blizzard said: "The CMA's official approval is great news for our future with Microsoft, and we look forward to becoming part of the Xbox Team."
The European Commission said the new commitments given by Microsoft to the CMA did not interfere with its EU commitments.
