The U.K.'s Competition and Markets Authority approved Microsoft's $69 billion proposed takeover of gaming firm Activision Blizzard, lifting the final major obstacle for the deal to complete.Microsoft initially declared its intention to acquire Activision Blizzard in January 2022, but has since encountered regulatory issues in the U.S., Europe and U.K. Authorities raised concerns that the purchase could lead to a decrease in competition within the gaming environment, particularly in relation to the emerging field of cloud gaming.
Britain's top competition watchdog gave approval on Friday for Microsoft's $69 billion acquisition of Activision Blizzard, eliminating the last significant impediment for the transaction to conclude.The Competition and Markets Authority reported that it cleared Microsoft's acquisition of Activision, but not cloud gaming rights.The regulator's statement Friday noted, "The new agreement stops Microsoft from monopolizing cloud gaming as this market develops, protecting competitive prices and services for British cloud gaming customers."The CMA was the final regulator to conclude the deal, and Microsoft can now complete the acquisition.
A major shift has been made by the CMA, who was the fiercest objector of the purchase. It was in January of 2022 when Microsoft suggested the purchase of Activision, however, the transaction has encountered regulatory obstructions in Europe, the U.S. and the U.K. July saw the CMA agree to look into a reorganized acquisition from Microsoft to relieve their worries. Microsoft offered several arrangements, which focused on allowing Ubisoft Entertainment, a French game producer, to have usage of Activision's cloud rights. "This will let Ubisoft to give out Activision's material under any type of business model, such as through multigame subscription services. It will also help to make sure that cloud gaming distributors won't have to depend on Windows operating systems for Activision's content, decreasing expenses and improving efficiency," the CMA put forth.
Regulators around the world were apprehensive that Microsoft's planned takeover of Activision would reduce competition in the gaming market, especially in the context of cloud gaming. There was also concern that Microsoft could make games such as Call of Duty exclusive to Xbox and its other platforms. Cloud gaming is seen as the next industry frontier, with subscription services allowing users to stream games just like with Netflix. The U.K. regulator then argued in April that if permitted, Microsoft would have a dominant role in the emerging cloud gaming market.After Microsoft made concessions to the EU, the European Union became the first major regulator to approve the deal in May. In response, the CMA maintained their original stance that the transaction should be blocked because the concessions allowed Microsoft to "set the terms and conditions for this market for the next ten years."The FTC made an effort to get the Activision takeover annulled, but this was lastly blocked by a judge in the U.S. Upon hearing this in July, the CMA declared that they were prepared to consider any proposals from Microsoft to address the regulator's worries.
In August, Microsoft made a further attempt to get its deal cleared by the CMA with a new set of concessions. As part of these changes, Ubisoft Entertainment will acquire the cloud rights to existing and new Activision video games over the next 15 years, instead of Microsoft. The U.K. approved the transaction, but the CMA made a point to criticize Microsoft's approach to the negotiations. Sarah Cardell, Chief Executive of the CMA, said that "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. Dragging out proceedings in this way only wastes time and money." Cardell also explained that this intervention ensures "people get more competitive prices, better services and more choice" with regards to cloud gaming. She concluded by emphasizing that "businesses and their advisors should be in no doubt that the tactics employed by Microsoft are no way to engage with the CMA."
Brad Smith, President of Microsoft, expressed his gratitude towards the CMA on X (formerly known as Twitter) after they made the decision to approve the Activision takeover. Smith further said, "We have now crossed the final regulatory hurdle to close this acquisition, which we believe will benefit players and the gaming industry worldwide." Bobby Kotick, CEO of Activision Blizzard, informed his employees via an email that the new partnership with Microsoft brings about "endless possibilities" for them and their players. Microsoft had taken steps before the takeover to guarantee that they wouldn't be making any games exclusive, which likely helped with the CMA's approval. To demonstrate their commitment to this, Microsoft made a deal in February with Nvidia for Xbox games to be featured on the cloud gaming service, and a 10-year agreement to make Call of Duty available to Nintendo players on the same day as Xbox, with complete features and content. In July, they even built a partnership with Sony to feature Call of Duty on the PlayStation gaming console.
Comments