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UK Regulators Approve Microsoft-Activision Blizzard Deal

On October 13, 2023, the United Kingdom’s Competition and Markets Authority (CMA) gave its approval for Microsoft’s acquisition of Activision Blizzard, one of the world’s leading gaming companies. This decision comes after months of scrutiny and revisions to the deal, making it one of the most huge tech transactions in history.

Activision Blizzard Deal

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Microsoft’s acquisition of Activision Blizzard for a $69 billion sent shockwaves through the gaming industry when it was declared in January 2022.

Activision Blizzard is famous for its well known game franchises, including Call of Duty, Candy Crush, World of Warcraft, Diablo, and Overwatch.

The acquisition promised to bolster Microsoft’s position in the gaming world, where it had been trailing behind Sony’s PlayStation and Nintendo.

One of the worries voiced by regulators was the potential for Microsoft to dominate the cloud gaming sector, stifling competition and limiting consumer choice.

The CMA at first blocked the deal in April 2023, communicating worries that Microsoft’s acquisition of Activision Blizzard would harm competition in the fast growing cloud gaming market.

The UK regulator was wary of Microsoft’s potential “stranglehold” on the sector, which could limit consumer choice and lead to higher prices.

The CMA’s position changed in the months that followed, as Microsoft presented a revised deal that aimed to address the regulator’s concerns.

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This revised deal included selling cloud gaming rights outside Europe to French gaming company Ubisoft Entertainment for the next 15 years.

Microsoft’s acquisition received approval from the European Union after the company agreed to license Activision titles royalty-free to cloud gaming platforms.

This concession aimed to ensure that Microsoft wouldn’t monopolize the cloud gaming sector. The U.S. Federal Trade Commission (FTC) also opposed the acquisition, attempting to halt the deal in court.

Despite initial setbacks, the FTC continued to challenge the acquisition, signaling its intention to pursue legal action even after the deal’s closure.

Sony, a rival in the gaming industry, had worries that the acquisition would give Microsoft exclusive control over popular Activision titles like Call of Duty. This raised fears that such titles could become exclusive to the Xbox platform.

With the UK’s CMA being the last major obstacle, Microsoft needed to address the worries raised by the regulator to secure approval for the deal.

The CMA reversed its initial decision to block the acquisition, citing “material changes of circumstance” and Microsoft’s agreement with Sony to make Call of Duty available on PlayStation for at least ten years.

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The CMA’s approval hinged on Microsoft agreeing to sell cloud streaming rights for all current and new Activision games released over the next 15 years outside the European Economic Area to Ubisoft Entertainment.

The CMA communicated worries about the deal’s structure and criticized Microsoft for its approach. The regulator warned other companies not to adopt similar tactics, emphasizing that it had the authority to defend its decisions even in court.

This aspect highlights the evolving dynamics of antitrust enforcement and corporate strategies in the modern tech landscape.

Microsoft’s acquisition of Activision is not just about gaining control of popular gaming franchises. It’s a strategic move that aligns with the company’s broader vision.

Microsoft aims to leverage the acquisition to boost the demand for its Xbox consoles, expand its subscription-based services like Xbox Game Pass, and tap into the rapidly growing mobile gaming market.

With the ownership of Activision, Microsoft now has the potential to explore mobile gaming further, building on the success of titles like Candy Crush.

This diversification allows Microsoft to target a broader audience and tap into new revenue streams within the gaming industry.

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