After a long legal battle and several advances and setbacks, the CMA (Competition & Markets Authority) has finally given provisional authorisation to the deal that will put the Activision Blizzard King group in the hands of Microsoft – Xbox. The regulator will now be open to opinions from the public and other members of the industry, but Microsoft will already be able to go ahead with the purchase, which must be completed by 18 October.
Although the deal has not yet been finalised, both Microsoft and Activision Blizzard see it as a significant step towards a merger and to the conclusion of the Microsoft-Activision deal long-lasting process.
On the table is one of the biggest deals ever made in the industry of video games. Microsoft – Xbox has pledged to pay $68.7 billion for the creator of Call of Duty, Warcraft, Candy Crush Saga and Overwatch, among other major titles.
The story behind Microsoft-Activision deal
The beginning
Microsoft had announced the deal at the beginning of 2022, but it was blocked in April by the British competition regulator, which fears that the tech giant will gain too much control of the cloud gaming market.
Since then, Microsoft has defeated the US Federal Trade Commission (FTC) in court, obtained the approval of the main regulator, the European Commission, and secured a deal with console rival Sony to supply Activision games on PlayStation for a decade.
The battle with the British CMA
In April of 2023, the UK’s Competition and Markets Authority (CMA) announced its “Final Report” on the acquisition, citing competition concerns about Cloud gaming in the UK.
In August, Microsoft and Activision, the producer of “Call of Duty”, announced a restructuring of its business in the UK market, transferring to Ubisoft the cloud gaming streaming rights to all current and future Activision Blizzard games, on PC and consoles, that are released over the next 15 years in a new attempt to win over the Competition and Markets Authority (CMA) and reach the conclusion of the Microsoft-Activision deal, which after a month of diligences, the changes made by Microsoft in the business plans were accepted by the CMA.
Reactions
CMA’s reaction
Last Friday, the CMA said that Ubisoft’s divestment “substantially addresses previous concerns”.
“While the CMA has identified limited residual concerns with the new agreement, Microsoft has put forward remedies which the CMA has provisionally concluded should resolve these issues,” the regulator said.
The CMA’s decision to reopen the case after it was blocked was a radical decision from its rulebook, but the body said on Friday that it had been consistent, and that Microsoft had “substantially restructured the agreement” to address its concerns.
“However, it would have been much better if Microsoft had presented this restructuring during our original investigation,” said Sarah Cardell, executive director of the CMA.
Microsoft’s reaction
On the other side of the table, in a message published on its blog, Microsoft says that this agreement with Ubisoft presents a different proposal for the acquisition of Activision under British law that was put forward in 2022 to the CMA. The new proposal thus hopes that the regulator’s review of the process can be favourable before the end of the extension of the pre-acquisition agreement with Blizzard.
“We have presented solutions that we believe fully address the CMA’s remaining concerns regarding cloud game streaming and we will continue to work to obtain approval to close the deal before the 18 October deadline,” said Microsoft president Brad Smith.
Activision’s reaction
Activision’s CEO, Bobby Kotick, expressed his excitement in an open letter published on the company’s ‘Newsroom’ website. He said that this approval is a milestone for the merger and a testament to their collaboration with regulators. Kotick believes that the acquisition will accelerate their ambitions for the future of gaming and allow them to better serve players. He also highlighted Microsoft’s recognition of Activision’s commitment to excellence and creative independence, expressing confidence in Microsoft’s resources and technology to create even better games.
Conclusion
The long and complex journey of the conclusion of the Microsoft-Activision deal has reached a significant milestone with provisional authorization from the UK’s Competition and Markets Authority (CMA). This authorization comes after a series of legal battles, negotiations, and restructuring efforts by Microsoft to address competition concerns, particularly in the cloud gaming market.
In summary, the Microsoft-Activision deal, marked by legal battles and regulatory scrutiny, has taken a major step toward completion with provisional approval from the CMA. The gaming industry and players alike will be watching closely as this transformative merger moves toward its conclusion, potentially reshaping the landscape of the video game industry.