Microsoft Corp. has secured approval from the UK’s Competition and Markets Authority (CMA) for its $69 billion procurement of Activision Blizzard Inc., marking the removal of the last significant global regulatory barrier to the largest gaming deal ever witnessed.
On Friday, the CMA articulated that Microsoft’s amended proposal, which entails divesting certain gaming rights to French publisher Ubisoft Entertainment SA, adequately addressed its competition qualms. The authority affirmed that this restructured offer aligns with the objectives of maintaining competitive pricing and enhancing service quality.
The trajectory of this monumental deal experienced a hiatus over the preceding months, attributed to apprehensions expressed by international antitrust regulators, a sentiment initially echoed by the UK. However, the situation witnessed a reversal post Microsoft’s triumph over the Federal Trade Commission’s (FTC) court scrutiny regarding the acquisition. Following this, the European Union (EU) endorsed the deal with behavioral adjustments in May, rendering the CMA as the solitary regulator obstructing the deal’s fruition.
Sarah Cardell, CEO of the CMA, conveyed a stern directive to Microsoft, stipulating that the deal’s progression hinged on a thorough resolution of the highlighted concerns. “We delivered a clear message to Microsoft that the deal would be blocked unless they comprehensively addressed our concerns and stuck to our guns on that,” remarked Cardell.
In a bid to expedite the deal, Microsoft tendered a significantly revised offer to the CMA during the summer, encapsulating notable titles like Call of Duty. Subsequently, both Microsoft and Activision consented to prolong the deal’s deadline to October 18.
Expressing gratification over surmounting the final regulatory obstacle, Brad Smith, Microsoft’s Vice Chair and President, stated, “We have now crossed the final regulatory hurdle to close this acquisition, which we believe will benefit players and the gaming industry worldwide.”
Post-acquisition, Microsoft will assume stewardship of revered gaming franchises such as Call of Duty, Candy Crush, and Diablo. This move aligns with Microsoft’s strategic acquisitions of game entities to augment its Xbox consoles, Windows PCs, and Game Pass subscription service portfolio, amidst its endeavor to ascend from the third position in the console market, currently trailing Sony and Nintendo.
This acquisition underscores Microsoft’s ambition to penetrate the $93 billion mobile gaming sector, albeit UK regulators exhibited apprehensions regarding Microsoft’s potential to monopolise the emergent cloud gaming arena. The integration of Activision’s offerings could potentially lure a broader consumer base to Microsoft’s cloud gaming platform, a facet of Game Pass, notwithstanding the prevailing niche status of cloud gaming, a market where tech behemoths Google and Amazon have yet to establish a solid footing.
Despite the prevailing approvals, the FTC persists in its challenge against the deal even post its closure, although such contention is unlikely to impede its completion. The agency disclosed its intention to proceed with its in-house trial opposing the acquisition.
In its final analysis, the CMA did acknowledge “limited residual concerns” regarding the new deal configuration. However, it was assuaged by Microsoft’s assurances, which rendered the terms concerning the rights divested to Ubisoft enforceable by the CMA.
In a statement, an Activision spokesperson expressed optimism following the official nod from the CMA, saying, “The CMA’s official approval is great news for our future with Microsoft, and we look forward to becoming part of the Xbox Team.”
This pivotal acquisition not only underscores Microsoft’s strategic foray into burgeoning gaming segments but also showcases the intricate dance between global tech giants and regulatory entities, as they navigate the complex terrain of international antitrust concerns. The collaboration between Microsoft and Activision Blizzard heralds a new chapter in the gaming industry, with both entities poised to leverage their combined prowess to deliver enhanced gaming experiences to a global audience.