Microsoft Secures Final Approval for $69 Billion Acquisition of Activision Blizzard

by Sophia Chen
Gaming Industry Acquisition

Microsoft received the ultimate green light for its $69 billion acquisition of Activision Blizzard from the United Kingdom’s Competition and Markets Authority (CMA) on Friday. This reverses the regulator’s prior stance to obstruct the transaction, thereby eliminating the last impediment to one of the most substantial technological acquisitions in history.

The acquisition of Activision Blizzard—known for other hit titles such as Candy Crush, World of Warcraft, Diablo, and Overwatch—by the maker of Xbox is anticipated to finalize ahead of a forthcoming Wednesday deadline. This culminates a nearly two-year process that had been hampered by rigorous regulatory examination from global authorities.

Last month’s preliminary nod from the CMA had paved the way for its final approval. The revised proposal from Microsoft was designed to mitigate apprehensions that the acquisition would be detrimental to competition and have an adverse impact on gamers, particularly in the burgeoning sector of cloud gaming. In this sector, gamers can bypass the need for high-cost gaming consoles and stream games directly to their mobile devices or tablets.

The UK regulator stated that the amended agreement would prevent Microsoft from monopolizing the cloud gaming market, thus sustaining competitive pricing and service options for UK consumers of cloud gaming services.

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Microsoft President Brad Smith expressed gratitude for the “comprehensive review and decision,” asserting that the acquisition will be beneficial for gamers and the global gaming industry. Activision CEO Bobby Kotick also voiced his approval, saying, “We are eager to become a part of the Xbox Team.”

Joshua Chapman, managing partner at venture capital firm Konvoy, which specializes in investing in video game startups, opined that the merger would be advantageous for gamers and stimulate healthy competition in the gaming industry.

Since its announcement in January 2022, Microsoft has successfully obtained authorization from antitrust bodies in over 40 countries, most notably from the 27-member European Union. The EU’s approval was contingent upon Microsoft’s commitment to permit users and cloud gaming platforms to stream its titles royalty-free for a decade.

Despite this, the transaction encountered opposition from regulatory bodies in the United States and the United Kingdom, alongside objections from leading competitor Sony, who were concerned about restricted access to the Call of Duty series for PlayStation users.

The U.S. Federal Trade Commission (FTC) is still in legal proceedings to reverse the merger, despite losing an initial court case aimed at delaying the transaction for further review.

To secure the CMA’s approval, Microsoft has agreed to divest cloud streaming rights outside the EU and three other European countries for all current and future Activision titles for the next 15 years to French game studio Ubisoft Entertainment.

Initial objections from British regulators were primarily driven by the risk that Microsoft would monopolize Activision’s titles in the cloud gaming market. However, after considering new developments—including the EU’s approval and an agreement with Sony to keep Call of Duty available on PlayStation for a minimum of 10 years—the CMA revised its position.

Yet, Sarah Cardell, CEO of the CMA, criticized Microsoft’s approach during the review process. Max von Thun, director of the Europe office of the Open Markets Institute, noted that the CMA’s change of stance could make it appear “weak and indecisive.”

As the acquisition moves forward, industry experts warn of the potential risk that merging firms may feel emboldened to dismiss initial regulatory disapprovals, which could have broader implications for antitrust enforcement.

Contributed by AP Technology Writer Matt O’Brien from Providence, Rhode Island.

Frequently Asked Questions (FAQs) about Microsoft Activision Acquisition

What is the significance of the UK Competition and Markets Authority’s approval?

The approval from the UK’s Competition and Markets Authority (CMA) was the final regulatory hurdle Microsoft needed to clear for its $69 billion acquisition of Activision Blizzard. This green light allows one of the largest tech deals in history to proceed to completion.

Who are the key players involved in this acquisition?

The key players in this acquisition are Microsoft, the maker of the Xbox and a leading technology company, and Activision Blizzard, a major gaming company known for blockbuster titles like Call of Duty, Candy Crush, and World of Warcraft.

What were the main concerns of regulatory authorities?

Regulatory bodies, including those in the United States and the United Kingdom, had concerns that the acquisition could stifle competition in the video gaming industry, particularly in the emerging cloud gaming sector.

How has Microsoft addressed regulatory concerns?

To address regulatory apprehensions, Microsoft submitted a revised proposal that promises not to monopolize the cloud gaming market and to allow royalty-free streaming of its titles for 10 years. The company also agreed to divest cloud streaming rights for all current and future Activision titles outside the EU and three other European countries for the next 15 years to Ubisoft Entertainment.

What are the expected benefits of this acquisition?

Microsoft and Activision Blizzard assert that the acquisition will benefit the global gaming industry and enhance the gaming experience for users. Microsoft also aims to strengthen its presence in the gaming market, particularly in cloud gaming.

Is the deal finalized?

While the acquisition has received the necessary approvals from global regulatory bodies, it is expected to finalize ahead of a forthcoming Wednesday deadline.

Are there any criticisms or controversies surrounding this deal?

Yes, the CMA’s initial block and subsequent approval of the deal have sparked debates about the regulator’s effectiveness. Moreover, the deal has faced resistance from top competitors like Sony and is still under appeal from the U.S. Federal Trade Commission.

What will happen to Activision’s existing games?

Activision’s existing games, such as Call of Duty, World of Warcraft, and others, will become part of Microsoft’s gaming portfolio. An agreement has been reached to keep Call of Duty available on PlayStation for at least 10 years.

What implications could this have on future tech mergers and acquisitions?

The acquisition sets a precedent for how global regulatory bodies approach antitrust issues in large tech transactions. It may encourage merging companies to challenge initial regulatory disapprovals, potentially affecting future antitrust enforcement.

More about Microsoft Activision Acquisition

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JaneDoe123 October 13, 2023 - 11:38 am

Wow, this is huge for Microsoft and the gaming industry. Can’t wait to see what changes are gonna come out of this.

ConsoleFan October 13, 2023 - 1:33 pm

Sony fans must be relieved that Call of Duty is staying on PlayStation. But for how long, thats the real question.

MergersAndMore October 13, 2023 - 5:04 pm

Given the scrutiny this deal went through, future tech acquisitions will definitely have a lot to consider. Sets a new bar for sure.

LawNerd October 13, 2023 - 9:14 pm

FTC still appealing? They must really believe this deal could be harmful, but doesn’t look like they can stop it now.

CloudQueen October 13, 2023 - 9:21 pm

Amazed at how cloud gaming is shaping these big deals. it’s like the new frontier for tech companies to fight over.

FinanceWatch October 13, 2023 - 10:55 pm

$69 billion is a staggering amount, even for a tech giant like Microsoft. This deal’s definitely gonna shake up Wall Street.

EUInsider October 14, 2023 - 2:45 am

EU approved it but the UK had reservations? Kinda strange given they usually move in lockstep on these things.

TechGuru88 October 14, 2023 - 7:06 am

Interesting how UK regulators flipped their decision. Makes you wonder what really went down behind the scenes, doesn’t it?

Crypto_King October 14, 2023 - 10:20 am

Wonder if Microsoft will bring in any blockchain tech to Activision games. Now that would be next level.


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