Microsoft’s $69 Billion Takeover of Activision Blizzard Gets UK Approval
The Competition and Markets Authority (CMA) in the United Kingdom has given the green light to Microsoft’s proposed $69 billion acquisition of the gaming giant, Activision Blizzard. This approval is a significant step toward finalizing the deal, which has been navigating regulatory hurdles in the U.S., Europe, and the UK since Microsoft’s initial proposal in January 2022.
Regulatory Challenges Across Three Continents
Microsoft’s acquisition of Activision Blizzard faced scrutiny and concerns from regulatory bodies due to fears of reduced competition, particularly in the emerging sector of cloud gaming. The UK’s Competition and Markets Authority was the final hurdle in the path of the acquisition, with their primary concern being the impact on cloud gaming competition.
UK Approval with a Catch
The CMA cleared Microsoft’s acquisition of Activision Blizzard but with an essential caveat: Microsoft will not acquire cloud gaming rights. The regulator emphasized that this approach would ensure competitive prices and services for UK cloud gaming customers, preventing Microsoft from monopolizing the burgeoning cloud gaming market. This decision marks a significant shift for the CMA, which had previously been the deal’s most vocal critic.
Ubisoft’s Role in the Acquisition
To address regulatory concerns, Microsoft offered a set of concessions aimed at addressing the CMA’s worries. These concessions revolved around transferring the cloud rights of Activision games to French game publisher Ubisoft Entertainment. This arrangement allows Ubisoft to offer Activision’s content using various business models, including multigame subscription services, while also promoting the use of non-Windows operating systems for Activision content.
Cloud Gaming and Competition Concerns
Global regulators expressed concerns that Microsoft’s acquisition could stifle competition in the gaming market, particularly in the realm of cloud gaming. There were worries that Microsoft might make key Activision titles, such as Call of Duty, exclusive to its Xbox and other platforms, potentially dominating the market. Cloud gaming, seen as the future of the industry, offers subscription services enabling users to stream games on a variety of devices, eliminating the need for expensive gaming consoles.
EU’s Early Approval and U.S. Legal Battles
The European Union was the first major regulatory body to approve the deal in May, following Microsoft’s concessions. In contrast, the U.S. Federal Trade Commission engaged in a legal battle with Microsoft to prevent the acquisition, which was ultimately thwarted by a judge in July, allowing the deal to proceed.
Microsoft’s Concessions to the UK
In August, Microsoft submitted further concessions to the CMA in its efforts to gain approval. Under the revised terms, Microsoft would not acquire cloud rights for existing Activision PC and console games or any new releases for the next 15 years. Instead, these rights would be divested to Ubisoft Entertainment before Microsoft’s acquisition of Activision. This move was designed to prevent Microsoft from gaining a stranglehold on the growing cloud gaming market.
Parting Shot at Microsoft’s Negotiation Tactics
While the UK approved the deal, the CMA issued a stern critique of Microsoft’s negotiation tactics, asserting that the tech giant had missed opportunities to restructure the deal during the initial investigation. The CMA viewed Microsoft’s insistence on an ineffective package of measures as a time- and money-wasting strategy.
Final Regulatory Hurdle Overcome
With the CMA’s approval, Microsoft is poised to close the acquisition, marking the conclusion of what has been a long and complex regulatory journey. Microsoft President Brad Smith expressed his gratitude for the CMA’s decision, emphasizing the potential benefits for players and the gaming industry worldwide. Activision Blizzard CEO Bobby Kotick conveyed his excitement for the future under Microsoft’s ownership, highlighting the numerous possibilities that this new chapter offers.
Throughout the regulatory process, Microsoft has made efforts to assure regulators and competitors that it does not intend to make games exclusive. This includes agreements to bring Xbox games to Nvidia’s cloud gaming service and collaborations with rival companies such as Sony to ensure multi-platform access to Call of Duty.