Microsoft Cleared for Activision Blizzard Acquisition, But Major Roadblocks Remain
Microsoft can finally seal the deal on acquiring Activision Blizzard, but with significant restrictions that might stall the process Although the purchase has gained approval from China, Microsoft's plans may be hindered due to the caveats
Microsoft is now legally allowed to proceed with the acquisition of Activision Blizzard as of May 22nd, however, there are certain conditions that may prevent them from doing so at this time. Despite being given the green light by numerous countries such as Saudi Arabia, Brazil, Serbia, Chile, Japan, South Africa, Ukraine, and the EU, among others, the deal is still under investigation by Australia and New Zealand. The most significant obstacle, however, is the lawsuit filed by the FTC in the home country in an attempt to block the acquisition in December 2022.
In an effort to halt the acquisition, a group of individuals in the gaming industry filed a lawsuit against Microsoft. However, the lawsuit was ultimately dismissed by a court in March with the opportunity for the plaintiffs to submit a revised lawsuit within 20 days, which they did. Despite their efforts, a preliminary injunction to block the deal was denied on May 19. Microsoft had agreed not to finalize the acquisition before May 22 to allow the court sufficient time to rule on the injunction motion.
However, Microsoft's plans to acquire Activision Blizzard have hit a roadblock as the British Competition and Markets Authority recently blocked the deal. The regulator's preliminary findings suggest that the acquisition could give Microsoft's Xbox division an unfair advantage in the cloud gaming sector, which is still in its early stages. While Microsoft could technically proceed with the acquisition without FTC approval, the company is unlikely to do so given the CMA's decision. Moreover, policing Microsoft's actions in the cloud gaming space could be a daunting task, leading the regulator to reject the deal altogether in order to protect competition in the industry.
Microsoft is unlikely to pursue the deal until the CMA's decision is overturned. This is primarily because the only viable option for completing the transaction without the CMA's approval would require Microsoft's gaming division to withdraw from the UK or cease offering cloud gaming services in the country. Microsoft has not indicated any willingness to make such a sacrifice to finalize the deal. It should be noted that the CMA's findings are still in the preliminary stages, and Microsoft has yet to appeal the decision as the window for doing so has not yet opened.
