UK Launches Public Consultation on Microsoft's Groundbreaking Activision Blizzard Acquisition

Highlights

The UK's Competition and Markets Authority is seeking more input on Microsoft's proposed acquisition of Activision Blizzard.

Microsoft has submitted an overview of "material changes of circumstances" to the CMA, seeking approval for the deal. Previously, the CMA declined the deal citing antitrust concerns. However, they are currently assessing whether Microsoft's concessions to the EU and a recent Call of Duty agreement with PlayStation adequately address those concerns.

The UK's Competition and Markets Authority is seeking further input on the proposed acquisition of Activision Blizzard by Microsoft. In April, the British regulator blocked Microsoft's $68.7 billion deal due to antitrust concerns.

Microsoft promptly appealed the UK's rejection of the Activision Blizzard acquisition. However, legal actions were put on hold in July when the CMA paused its actions against Microsoft to work towards reaching an agreement on the transaction. Negotiations between the two parties have been ongoing, and Microsoft has recently provided the CMA with an overview of significant changes to its original acquisition proposal.

The CMA is seeking additional feedback from participants in the gaming industry before forming its own opinion on whether Microsoft's newly reported changes in circumstances are significant enough to warrant approval of the contested transaction. The tech giant's latest argument centers around the claim that the concessions it previously made to the European Union and the recent Call of Duty deal with PlayStation should be sufficient in addressing the CMA's antitrust concerns.

When the company's original proposal was rejected, the CMA argued that Microsoft could use Activision Blizzard's extensive catalog to gain an unfair advantage in the fast-growing game streaming industry. The CMA decided that blocking the deal would be a simpler way of preventing monopolistic behavior in the nascent game streaming market, as policing post-acquisition behavior would require significant resources.

While the Call of Duty PlayStation agreement does not directly address these concerns, the concessions made by Microsoft to the EU do. To secure approval for the acquisition, Microsoft agreed to provide a free license to all EU citizens, allowing them to stream any Activision Blizzard title through competing platforms, similar to its own Xbox Cloud Gaming platform. Microsoft is also offering this offer to all British nationals.

It remains to be seen if this concession will be sufficient to win the approval of the CMA for the acquisition. In the past, the regulator rejected several remedies proposed by Microsoft because they all had expiration dates. The EU streaming license agreement is only valid for ten years after the completion of the transaction. However, considering the UK agency's willingness to reach an agreement for Microsoft's Activision Blizzard acquisition, the deal is now closer than ever to becoming a reality.