In a major regulatory development, the $69 billion deal between Microsoft and Activision Blizzard has cleared a significant hurdle. The acquisition, which gives Microsoft more dominance in the video-gaming market, was blocked by the UK regulator, the Competition and Markets Authority (CMA), in April over concerns of Microsoft’s potential stranglehold on the cloud gaming market. However, the deal was finally approved after Microsoft agreed to sell the streaming rights of Activision’s games to Ubisoft Entertainment.
The CMA’s decision to reopen the case and ultimately approve the deal after Microsoft’s concessions is being hailed as a victory for competition, consumers, and economic growth. By ensuring that Microsoft does not lock up competition in the cloud gaming market, the CMA aims to preserve competitive prices and services for UK cloud gaming customers. This outcome makes the CMA the only competition agency globally to have achieved such a result.
Microsoft’s acquisition of Activision Blizzard was announced in early 2022 to bolster its presence in console, mobile, PC, and cloud gaming and better compete with industry leader Sony. The deal faced opposition from the US Federal Trade Commission (FTC), but after failing to stop it, the CMA was left as the sole regulator still fighting against the acquisition. While the FTC continues its fight, Microsoft has made it clear that it will proceed with closing the deal.
The approval from the CMA comes after the European Commission gave its green light in May, accepting Microsoft’s commitments to license Activision’s games to other platforms. The CMA’s decision in April had drawn criticism from the merging parties, including Microsoft, who accused Britain of being closed for business. However, the CMA’s Chief Executive, Sarah Cardell, stressed the independence of the regulator and its commitment to making decisions free from political influence.
The CMA’s approval of the Microsoft-Activision deal is seen as a victory for the regulator but also raises concerns about over-regulation in the tech sector. Some fear that the UK may become an unfavourable place to do business, particularly for the tech industry, leading to close monitoring of the CMA’s actions in the future.
Microsoft expressed gratitude for the CMA’s thorough review and decision, believing that the acquisition will benefit players and the gaming industry worldwide. Activision Blizzard also welcomed the approval, stating that it is looking forward to becoming part of the Xbox Team.
Overall, the clearance of the Microsoft-Activision deal by the CMA marks a significant milestone, setting the stage for Microsoft to expand its presence in the gaming market and compete more effectively with industry leaders like Sony.