CMA finally approves Microsoft's acquisition of Activision Blizzard

CMA finally approves Microsoft's acquisition of Activision Blizzard


13 October 2023

Following a prolonged back and forth, the UK's antitrust authority has approved Microsoft's acquisition of Activision Blizzard for $68.7 billion. Microsoft's decision to sell cloud gaming rights to Ubisoft was described by the regulator as a "gamechanger that will promote competition."

With the last significant hurdle removed, the Competitions and Markets Authority (CMA) has essentially cleared the way for the businesses to complete the largest gaming merger in history. This action was largely anticipated after the watchdog stated in September that the company's new merger agreement "substantially addresses previous concerns and opens the door to the deal being cleared."

In April, the CMA blocked the deal on the grounds of a belief that it would make Microsoft too dominant of a player in the cloud gaming space. However, as other dominoes that were preventing the deal from happening fell, the CMA gave Microsoft a second chance to resolve its concerns. The companies extended their merger agreement by three months to give them time to smooth things out with the CMA.

Microsoft later presented to the watchdog a revised agreement in which it will sell Activision Blizzard game streaming rights to Ubisoft if the merger is approved. Ubisoft would then manage cloud streaming rights in perpetuity for existing titles as well as any ones released by Activision Blizzard over the next 15 years. Given the CMA's reservations about the previous arrangement, Microsoft clearly believed that the concession would be big enough to satisfy the regulator. That, evidently, is exactly what occurred.

Last month, the CMA stated that it had "residual concerns" about enforcing Microsoft's updated plan. On the other hand, it stated that "Microsoft gave undertakings that will ensure that the terms of the sale of Activision's rights to Ubisoft are enforceable by the CMA."

The regulator bragged about its role in pressuring Microsoft to make concessions. "By selling Activision's cloud streaming rights to Ubisoft, we've ensured that Microsoft does not have a stranglehold on this important and rapidly developing market," CMA CEO Sarah Cardell said in a statement. "As cloud gaming expands, this intervention will ensure that consumers receive more competitive prices, better services, and more options." We are the only competition agency in the world to have achieved this result."

There have been speculations that the modified agreement may be reviewed by European Union antitrust officials. After Microsoft made several cloud gaming concessions, EU regulators approved the deal in May. According to Bloomberg, the EU's competition regulators saw no reason to be concerned about the modified contract, which would necessitate a new probe.

After the Federal Trade Commission's attempt to temporarily halt the deal while an administrative trial was rejected by a US court, the CMA and both businesses involved urged a tribunal to postpone Microsoft's appeal against the UK regulator's original judgment. The tribunal agreed, and the CMA approved the merger after considering Microsoft's amended plan. It now appears to be a matter of time before this is finalized and one of the largest tech mergers in history is completed.

However, one important possible stumbling block remains. The FTC is proceeding with its challenge to the agreement. That attempt will not prevent Microsoft from completing the transaction, but the FTC might require the company to divest some or all of Activision Blizzard.

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