The UK competition watchdog has approved Microsoft Corp.’s acquisition of Activision Blizzard Inc., a deal worth $69 billion. This approval marks the removal of the final major global regulatory obstacle that was preventing the completion of the largest gaming deal ever.
The Competition and Markets Authority (CMA) stated on Friday that Microsoft’s restructured offer, which involved selling some gaming rights to French publisher Ubisoft Entertainment SA, addressed any competition concerns they had. The CMA believes that this deal will ensure competitive prices and improved services.
This acquisition has faced challenges from global antitrust regulators for months, including an initial rejection from the UK. However, Microsoft gained unexpected momentum after successfully overcoming a court challenge from the Federal Trade Commission. The European Union also greenlit the deal in May, subject to certain behavioral remedies. This left the CMA as the only regulatory body obstructing the deal’s progress.
Sarah Cardell, CEO of the CMA, stated, “We made it clear to Microsoft that the deal would be blocked unless they comprehensively addressed our concerns, and we stood firm on that.”
In a final effort to push the deal through, Microsoft submitted a significantly different deal to the CMA in the summer. The deadline for the deal was extended to October 18, and it has now successfully crossed the final regulatory hurdle.
“We have now cleared the final regulatory hurdle to complete this acquisition, which we believe will benefit players and the gaming industry worldwide,” said Brad Smith, Vice Chair and President of Microsoft.
Once finalized, Microsoft will gain control over popular gaming franchises such as Call of Duty, Candy Crush, and Diablo.
In recent years, Microsoft has been acquiring game companies in order to bring top games to its ecosystem of Xbox consoles, Windows PCs, and the Game Pass subscription service. Currently, Microsoft ranks third in the console market, behind Sony and Nintendo.
The UK regulators, however, were more concerned about Microsoft’s potential dominance in the emerging cloud gaming market rather than its entry into the $93 billion mobile gaming market. With Activision’s games, Microsoft aims to attract more customers to its cloud gaming service, which is a key feature of Game Pass. Analysts have noted that cloud gaming remains a niche market, with both Google and Amazon struggling to establish a foothold.
The European Union has confirmed that the changes made to the deal do not require further approval in Brussels. Additionally, the EU stated that the commitments made by Microsoft in the UK do not interfere with its operations within the EU.
While the FTC continues to challenge the deal even after its completion, it is unlikely to derail the acquisition. The agency plans to proceed with an in-house trial against the acquisition.
The CMA did acknowledge “limited residual concerns” with the new deal, but Microsoft has provided assurances that the terms of the rights sold to Ubisoft will be enforceable by the CMA.
“The CMA’s official approval is fantastic news for our future with Microsoft, and we are excited to become part of the Xbox Team,” said an Activision spokesperson.
