The Competition and Markets Authority in the United Kingdom has approved Microsoft's $69 billion acquisition of gaming company Activision Blizzard, finally removing the last major barrier for the deal to be completed. Microsoft initially presented the idea of purchasing Activision Blizzard in the beginning of 2022 but have been met with resistance from regulators in the United States, Europe, and U.K. due to worries that the merger would lessen the competition in the gaming industry, particularly in the budding realm of cloud gaming.
The Competition and Markets Authority in Britain approved Microsoft's $69 billion acquisition of Activision Blizzard on Friday, eliminating the last major impediment for the transaction to go through.The CMA declared that it cleared the purchase for Microsoft, excluding cloud gaming rights.“Our decision is expected to ensure customers have a fair choice of cloud gaming services in the UK, providing competitive prices and services,” said the regulator in a statement Friday.This was the final regulator to permit the deal and Microsoft should be able to close the acquisition.
The CMA, which had been the major opponent of the takeover, has now changed its stance and given its approval to the acquisition.When Microsoft initially announced its proposal back in January 2022, it faced opposition from regulatory bodies in the U.S., Europe, and the U.K.To address the CMA's concerns, Microsoft made a series of concessions, which entailed assigning the cloud license of all Activision content to French game publisher Ubisoft Entertainment.The CMA stated that this compromise would allow Ubisoft to offer the content in any way they desire, such as through multi-game subscriptions, while also ensuring that cloud gaming providers would be able to access Activision games on non-Windows systems, consequently reducing costs and increasing efficiency.
Regulators around the globe were worried that the takeover would decrease competition in the games industry, particularly with cloud gaming. Microsoft could also take some of Activision's most popular games, such as Call of Duty, and make them exclusive to Xbox and other Microsoft systems. Cloud gaming is seen as the future of the industry, offering services that enable people to stream games like they would watch a movie or show on Netflix, and this could even do away with the need for expensive consoles, allowing people to play on their PCs, phones, and TVs. The watchdog from the U.K. declared when it blocked the purchase in April that allowing it to move forward would give Microsoft a paramount position in the still developing cloud gaming sector.
The European Union was the first major authority to approve the acquisition in May, after Microsoft presented certain concessions to the EU. At that moment, the CMA stood firm on its initial decision to reject the deal as the compensations provided to the EU would give Microsoft the capability to "establish the conditions for this market over the next ten years.”In the U.S., the Federal Trade Commission tried legally to stop the Activision buyout, but in July a judge declined the FTC's request, meaning that the deal could move forward in the U.S. Just a couple of hours later, the CMA declared it was "willing to consider any propositions from Microsoft to revamp the transaction" in order to address its worries.
In August, Microsoft attempted to get the deal cleared a second time, by providing concessions to the CMA. The restructured transaction entailed divesting cloud rights for existing and newly released Activision PC and console games for the next 15 years to Ubisoft Entertainment. Sarah Cardell, CEO of the CMA, commented in a statement that "With the sale of Activision's cloud streaming rights to Ubisoft, we've made sure Microsoft can't have a stranglehold over this important and rapidly developing market. As cloud gaming grows, this intervention will ensure people get more competitive prices, better services and more choice." The transaction was approved in the U.K., though the CMA, which has been intensifying its scrutiny of significant mergers, denounced Microsoft's negotiation procedures. Cardell warned that "businesses and their advisors should be in no doubt that the tactics employed by Microsoft are no way to engage with the CMA. Microsoft had the opportunity to restructure during our initial investigation however kept asserting on a package of measures that we advised them simply wouldn't work. Extending proceedings in this manner only consumes time and money."
The CMA was the last major regulator to approve the Activision takeover.Microsoft President Brad Smith declared on X, formerly known as Twitter, his gratitude for the CMA's inspection and verdict.He commented, "We have now passed the ultimate regulatory blockage to conclude this acquisition, which we are certain will be advantageous to players and the gaming industry all over the globe."Bobby Kotick, CEO of Activision Blizzard, sent an email to staff in which he articulated his delight for the forthcoming chapter with Microsoft and the boundless possibilities it brings for them and their players.Throughout the regulatory probing, Microsoft made it clear to regulators and its closest rivals that its games would not be exclusive. The tech giant in the U.S. signed a contract in February to make Xbox games accessible on Nvidia's cloud gaming service and also established a 10-year treaty to bring Call of Duty to Nintendo players on the same day as Xbox, with "complete feature and content equality." In July, Microsoft concluded a deal with its biggest adversary Sony to make Call of Duty available on the Japanese firm's PlayStation gaming console.
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