Microsoft’s $69 billion purchase of Activision Blizzard has been given the green light by the UK Competition and Markets Authority. The acquisition, which has been delayed for nearly two years due to intense scrutiny from global authorities, will now move forward, pending the approval of a Wednesday deadline. The UK watchdog approved the deal after Microsoft made revisions to its proposal, addressing concerns about competition in the emerging cloud gaming market. The approval from UK regulators, along with the clearance from more than 40 other countries, brings Microsoft one step closer to completing one of the largest tech transactions in history.
Microsoft’s $69 Billion Purchase of Activision Blizzard Approved by UK Competition Watchdog
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Overview
Microsoft’s acquisition of gaming company Activision Blizzard for $69 billion has received final approval from the UK’s Competition and Markets Authority (CMA). This decision reverses the CMA’s earlier decision to block the deal and removes the last obstacle for one of the largest tech transactions in history. The approval comes after Microsoft made amendments to its proposal to address concerns about competition in the gaming industry, particularly in the emerging cloud gaming market.
Background
After facing intense scrutiny from authorities around the world, Microsoft’s purchase of Activision Blizzard is finally set to close. The Xbox maker’s acquisition of Activision, the company behind popular games like Call of Duty, Candy Crush, and World of Warcraft, has been delayed for nearly two years. The deal is seen as a major milestone in the gaming industry and has been met with both anticipation and concern.
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Reversal of Earlier Decision
The UK’s Competition and Markets Authority had initially blocked the transaction, citing concerns that Microsoft could withhold Activision titles from the cloud gaming market. However, after the European Union granted approval to the deal with certain conditions, the CMA decided to reconsider. The EU approval was granted after Microsoft agreed to license Activision titles royalty-free to cloud gaming platforms. Additionally, Microsoft signed an agreement with Sony to make Call of Duty available on PlayStation for at least 10 years. These changes prompted the CMA to reverse its earlier decision and give final approval to the deal.
Implications for the Gaming Industry
The acquisition of Activision Blizzard by Microsoft has significant implications for the gaming industry. Gamers are expected to benefit from the deal, as it will likely lead to increased competition and innovation. Joshua Chapman, managing partner at venture capital firm Konvoy, believes that the deal will be productive for the gaming industry as a whole and healthy for competition in the gaming market. The merger of these two industry giants has the potential to reshape the landscape of the gaming industry and create new opportunities for both companies.
Approval from Antitrust Authorities
Microsoft’s acquisition of Activision Blizzard has received approvals from antitrust authorities in over 40 countries. The company’s commitment to address concerns about competition and protect gamers’ interests has played a crucial role in obtaining these approvals. The European Union’s approval, in particular, was significant as it required Microsoft to allow users and cloud gaming platforms to stream its titles without paying royalties for 10 years. These approvals demonstrate Microsoft’s commitment to complying with antitrust regulations and ensuring a fair and competitive gaming market.
Resistance from Regulators
Despite obtaining approvals from many antitrust authorities, Microsoft faced resistance from regulators in the UK and the US. Both British and American regulators expressed concerns about the potential negative impact of the deal on competition in the video game industry. Sony, one of Microsoft’s top rivals, also raised concerns that the acquisition would limit PlayStation gamers’ access to Activision’s popular Call of Duty franchise. The US Federal Trade Commission (FTC) attempted to pause the deal, but its request was denied by a court. The FTC has appealed this decision and expressed its intention to challenge the deal even after it closes.
US Federal Trade Commission
The US Federal Trade Commission has been one of the main opponents of Microsoft’s acquisition of Activision Blizzard. The FTC filed a court bid to pause the deal so that its in-house judge could review it, but the bid was unsuccessful. The FTC’s concerns center around the potential anti-competitive effects of the deal and its impact on consumers. Despite the setbacks, the FTC has not given up and plans to resume its trial to challenge the deal. The outcome of this trial will be significant and could potentially impact the future of the deal.
Last Major Obstacle
The approval from the UK’s Competition and Markets Authority was the last major obstacle for Microsoft’s acquisition of Activision Blizzard. The CMA’s initial decision to block the deal had caused significant uncertainty and delays. However, with the CMA’s reversal and final approval, the transaction is expected to close soon. This final hurdle clears the way for the deal to proceed and marks a significant step forward for Microsoft in its quest to acquire Activision Blizzard.
Conditions for Approval
In order to obtain approval from the UK’s Competition and Markets Authority, Microsoft has agreed to certain conditions. One of the key conditions is the sale of cloud streaming rights outside the European Union and three other European countries for all current and new Activision games released over the next 15 years to French game studio Ubisoft Entertainment. This condition is aimed at ensuring competition in the cloud gaming market and preventing Microsoft from monopolizing this emerging sector.
Criticism of the Deal
While the approval of the deal by the UK’s Competition and Markets Authority is a significant milestone, the regulator has criticized the way the deal came together. The CMA’s CEO, Sarah Cardell, stated that Microsoft had the opportunity to restructure the deal during the initial investigation but instead insisted on measures that were not deemed sufficient. The regulator warned other companies against using similar tactics and stated that dragging out proceedings in this manner only wastes time and money. However, others have praised the CMA for imposing stronger conditions on Microsoft compared to the European Commission, signaling a commitment to robust antitrust enforcement.
In conclusion, Microsoft’s $69 billion purchase of Activision Blizzard has been approved by the UK’s Competition and Markets Authority, reversing its earlier decision to block the deal. This approval marks a significant milestone for the gaming industry and clears the final hurdle for one of the largest tech transactions in history. The deal has faced intense scrutiny from regulators around the world, but Microsoft’s commitment to addressing concerns about competition and protecting gamers’ interests has helped secure approvals from antitrust authorities in over 40 countries. While the US Federal Trade Commission remains a significant obstacle, the approval from the UK’s regulator paves the way for the deal to proceed, potentially reshaping the gaming industry and creating new opportunities for both companies.
