Microsoft is reportedly considering selling some UK cloud gaming rights

Microsoft is reportedly considering selling some of its UK cloud gaming rights in a bid to gain regulatory approval for its $69 billion Activision Blizzard acquisition.

According to Bloomberg sources, the company could sell the cloud-based market rights for games in the UK to a telecommunications, gaming or internet-based computing company, or possibly a private equity firm.

The UK’s Competition and Markets Authority (CMA) blocked the Activision deal in April due to concerns about its impact on the nascent cloud gaming market.

Microsoft had been scheduled to appeal the decision in a court case beginning on July 28, but earlier this week the Xbox maker and the CMA paused legal proceedings with a view to reaching an out of court agreement.

Microsoft wants to complete the transaction before the current merger agreement expires on July 18, after which Activision Blizzard could walk away with a $3 billion termination fee if an extension isn’t agreed.

In a research note to investors this week, Wedbush Securities analysts Nick McKay and Michael Pachter predicted Microsoft will make cloud gaming concessions in the UK that enable it to complete the deal before next week’s deadline.

“We believe Microsoft can carve out Game Pass UK PLC as a separate operating subsidiary with an independent board charged with keeping Activision content off the Game Pass platform pending the conclusion of Microsoft’s appeal of the CMA decision,” they wrote. “This would likely satisfy the CMA, and the deal should close by next Tuesday.”

While the regulator has said it’s ready to consider a restructured deal proposal, it has also warned that this process may require it to carry out a fresh merger investigation.

Earlier this week Microsoft won a court battle with the Federal Trade Commission which cleared a path for it to complete the acquisition in the US. The FTC, which is also seeking to block the deal over antitrust concerns, is appealing the ruling.