Microsoft first unveiled its intention to acquire Activision Blizzard in January 2022, and the journey to approval has been fraught with regulatory challenges not just in the United Kingdom but also in the United States and Europe.
Britain’s top competition watchdog, the Competition and Markets Authority (CMA) has given the green light to Microsoft Corp’s (NASDAQ: MSFT) proposed $69 billion takeover of gaming giant Activision Blizzard Inc (NASDAQ: ATVI).
The CMA Turnaround
Initially, a staunch critic of the takeover, the CMA had effectively blocked the deal earlier in the year due to concerns about its potential impact on the budding cloud gaming market. However, according to a recent report, the CMA has now given its conditional approval, marking a pivotal moment in this high-stakes acquisition.
While the CMA has cleared the deal for Microsoft, it has done so with a crucial stipulation, Microsoft will not have control over cloud gaming rights. This condition is significant in the context of the evolving gaming industry landscape.
As cloud gaming gains momentum and continues to disrupt traditional gaming models, ensuring healthy competition is essential to maintaining competitive prices and consumer services. The regulator stated:
“The new deal will stop Microsoft from locking up competition in cloud gaming as this market takes off, preserving competitive prices and services for UK cloud gaming customers.”
Microsoft President Brad Smith expressed gratitude for the CMA’s review and decision, stating:
“We’re grateful for the CMA’s thorough review and decision today. We have now crossed the final regulatory hurdle to close this acquisition, which we believe will benefit players and the gaming industry worldwide.”
Microsoft’s Long and Winding Path
Microsoft first unveiled its intention to acquire Activision Blizzard in January 2022, and the journey to approval has been fraught with regulatory challenges not just in the United Kingdom but also in the United States and Europe. The CMA, in particular, had been a formidable obstacle, contending that the acquisition could stifle competition in the cloud gaming industry.
Regulators across the globe had expressed concerns that the acquisition could reduce competition in the gaming market, especially in the realm of cloud gaming. Fears were articulated that Microsoft might make pivotal Activision titles, such as Call of Duty, exclusive to Xbox and other Microsoft platforms.
In July, the CMA signaled its willingness to consider a restructured acquisition from Microsoft that would alleviate its concerns. In response, Microsoft proposed a set of concessions designed to address these apprehensions. Key among these concessions was the divestment of cloud rights for Activision games to French game publisher Ubisoft Entertainment.
This move, according to the CMA, would empower Ubisoft to offer Activision’s content under various business models, including through multi-game subscription services, while also facilitating the use of non-Windows operating systems for Activision content in cloud gaming.
With the sale of Activision’s cloud streaming rights to Ubisoft, the CMA has ensured that Microsoft cannot monopolize this rapidly developing and important market. As cloud gaming continues to grow, this intervention is expected to provide consumers with more competitive prices, better services, and greater choices.