After much back and forth, the UK’s antitrust watchdog has approved Microsoft’s $68.7 billion acquisition of Activision Blizzard. The regulator referred to Microsoft’s agreement to allow Ubisoft to purchase its cloud gaming rights as a “gamechanger that will promote competition.”
The Competitions and Markets Authority (CMA) has now substantially cleared the way for the businesses to finalize the largest merger in gaming history with the removal of the remaining significant hurdle. After the watchdog stated in September that the company’s new merger agreement “substantially addresses prior concerns and opens the door to the deal being cleared,” that action was widely anticipated.
The CMA prohibited the agreement in April on the grounds that it would give Microsoft an unfair advantage in the cloud gaming market. However, when more barriers to the deal’s completion crumbled, the CMA offered Microsoft another chance to allay its worries. To give themselves more time to work things out with the CMA, the businesses added an extra three months to their merger agreement.
Later, Microsoft sent the watchdog a revised agreement in which, if the merger goes through, it will transfer Activision Blizzard’s game streaming rights to Ubisoft. After that, Ubisoft would be in charge of cloud streaming rights for any future releases by Activision Blizzard as well as any games that are now in development. Microsoft obviously thought that the concession would be large enough to allay the CMA’s reservations regarding the initial deal. That’s exactly what happened, it seems.
Last month, the CMA stated that it had “residual concerns” regarding the implementation of Microsoft’s updated proposal. It did say 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 how it got Microsoft to give in. With the sale of Activision’s cloud streaming rights to Ubisoft, the CMA’s chief executive officer Sarah Cardell remarked, “We’ve ensured Microsoft can’t have a stranglehold over this important and rapidly developing market.” “This intervention will make sure that people have more competitive prices, better services, and more choice as cloud gaming expands. We achieved this result as the sole competition agency in the world.
There were rumors that the revised agreement would be subject to antitrust regulators in the European Union. Following certain concessions from Microsoft related to cloud gaming, EU regulators approved the transaction in May. According to Bloomberg, the updated agreement did not raise any issues that would require further investigation in the eyes of the bloc’s competition officials.
The CMA and both involved businesses sought a tribunal to postpone Microsoft’s appeal against the UK regulator’s original ruling after a US judge rejected the Federal Trade Commission’s effort to temporarily stop the agreement until an administrative trial. The tribunal concurred, and the CMA approved the merger after considering Microsoft’s revised plan. It now appears that this will be finalized soon, making it one of the largest tech mergers in recent memory.
However, there is still one huge potential obstacle to overcome. The FTC is continuing with its effort to contest the agreement. Although the FTC might compel Microsoft to sell some or all of Activision Blizzard, such effort won’t prevent the business from finalizing the transaction.
