Game-Changing Deal: Microsoft Set to Seal Activision Blizzard Acquisition, CMA Gives Green Light

Highlights

The UK's Competition and Markets Authority (CMA) has given final clearance for Microsoft to acquire Activision Blizzard, but without cloud gaming rights.

The CMA initially blocked the deal over concerns about Microsoft's dominant position in the cloud gaming industry. However, they approved it after the agreement was amended to grant cloud gaming rights to Ubisoft instead. This decision by the CMA is a significant advancement in the deal. However, the US's FTC still presents a potential obstacle, as they are appealing a judge's decision to not issue an injunction.

The CMA has given its approval for Microsoft's acquisition of Activision Blizzard, nearly one year after the initial announcement of the deal. While many countries and the EU expressed their support, the UK's Competition and Markets Authority had been one of the most vocal opponents of the acquisition. However, in April 2023, the CMA blocked the Activision Blizzard deal, which prompted Microsoft to go back to the drawing board and devise a new version of the agreement.

The CMA's concerns primarily revolved around Xbox Game Pass and Microsoft's already-established dominance in the cloud gaming industry. According to the trade regulator, the original iteration of the Activision Blizzard deal could have granted the tech giant an unfair advantage in the emerging market. In the amended version of the deal, Ubisoft, an unrelated third party, now holds complete cloud gaming rights for all ABK intellectual properties. Ubisoft will handle the licensing of Activision Blizzard's PC and console titles for the next 15 years, potentially even overseeing their inclusion in Xbox Game Pass.

The CMA granted preliminary approval to the Activision Blizzard acquisition in September, anticipating the final clearance. The CMA's decision was uncertain until now, and it was unclear how Microsoft and Activision Blizzard would proceed if the UK authority rejected the deal again or if there were alternative solutions to bypass the UK market.

The UK's trade regulator announced that it has granted Microsoft Corporation consent to acquire Activision Blizzard, Inc., with the exclusion of Activision's cloud streaming rights outside of the European Economic Area. This approval is conditional on Activision transferring these rights to a third party, specifically Ubisoft, before the merger between Microsoft and ABK is finalized. The CMA considers Microsoft's willingness to amend the agreement and relinquish cloud streaming rights as a significant development that will prevent them from monopolizing the competition in the growing cloud gaming market.

While the CMA's concession represents significant progress in finalizing the ABK deal, the US's FTC remains a potential obstacle. The regulatory body is appealing the judge's decision to reject an injunction, indicating their continued intent to block the acquisition. Despite this, it has been widely anticipated that the two gaming giants would proceed with the merger regardless of the FTC's opposition. Microsoft President Brad Smith has even suggested that the CMA's decision is the last regulatory hurdle, implying that the US regulator's stance will not ultimately impede the deal's completion. Sources: CMA 1, 2