In January 2022, Microsoft announced its intent to acquire Activision Blizzard for $68.7 billion. The video game giant accepted the deal, as Microsoft was offering a 30% premium over the market value of Activision. However, the gaming industry expressed serious concerns over the acquisition, and both parties have faced multiple barriers in closing the deal.
One of the major concerns was that Microsoft could make Activision’s popular games like Call of Duty exclusive to the Xbox. Microsoft has been trying hard to comply with as many regulations as possible, to sign the papers. The good news is that Microsoft has been finally cleared by the Competition and Markets Authority of the UK, to complete the acquisition of Activision Blizzard.
Microsoft’s Activision Blizzard Deal Has Been a Regulatory Nightmare So Far
Ever since Microsoft announced its buying plans of Activision, Sony has been paranoid about the deal. Activision’s Call of Duty Modern Warfare is the second most popular game on Sony’s PlayStation. Hence, Sony was worried that Microsoft would pull the game away from PlayStation, and make it exclusive on Xbox.
Following the concerns raised by Sony, the Federal Trade Commission of the United States (FTC) filed a lawsuit against Microsoft in December 2022. The suit stated that the Activision deal would give Microsoft an unfair advantage over its competitors in the console gaming market.
As if the FTC lawsuit was not enough, the Competition and Markets Authority of the UK (CMA) opposed the deal in January 2023. The CMA said that Activision is a major player in the cloud gaming industry, and its merger with Microsoft would create a huge monopoly in the cloud gaming market.
With two major legal hurdles in this acquisition, both Microsoft and Activision were struggling to seal the deal. As a slight relief, the FTC lawsuit to restrain the deal was rejected by a district court in the USA, in July 2023. However, the CMA restrictions on the deal were still pending.
Microsoft could have potentially gone ahead with the deal, even without CMA approval. The only drawback of this would be that the deal would not get officially recognized in the UK, and hence Microsoft could not impose its ownership over Activision’s business. Considering the impact of the CMA, other regions too would have done the same, leaving the deal in a complete mess.
Hence, Microsoft and Activision appealed to the CMA, to get the acquisition completed. In August 2023, Microsoft offered to exclude the cloud gaming rights of Activision from the deal, while keeping the ownership of other gaming titles. Microsoft also did not reduce the valuation of the deal, keeping it the same at $68.7 billion.
We’ve cleared the new deal for Microsoft to buy Activision without cloud gaming rights.
In August, Microsoft made a concession that would see Ubisoft, instead of Microsoft, buy Activision’s cloud gaming rights.
Read more: https://t.co/Z4scLEJFy0
1/2 pic.twitter.com/gmqwZsOOFi
— Competition & Markets Authority (@CMAgovUK) October 13, 2023
Today, the CMA has officially cleared the Microsoft and Activision Blizzard deal. However, as per Mircosoft’s proposal, the transfer of cloud gaming rights will not be a part of this deal. The deal is now expected to be completed by October 18.
PlayStation Users Can Play Activision Games Up To 2027
The CMA’s nod to the Microsoft-Activision deal could worry PlayStation users, as per earlier concerns of Activision titles being taken away from the platform. To their relief, Sony has already signed an agreement with Microsoft to keep all Activision games on the PlayStation up to 31 December 2027.
The agreement also includes future versions of COD until the proposed date. Microsoft says that the company is committed to maintaining a healthy environment in the gaming industry, and will comply with all types of regulations with this deal.
Microsoft’s acquisition of Activision Blizzard is by far the biggest deal that they have ever signed. The company now owns the majority of the popular games like Minecraft, Halo, Call of Duty, and more. In the past, Microsoft has also acquired several big game development houses such as Obsidian Entertainment and Forza.
