Summary
The CMA has approvedMicrosoft’s acquisition of Activision Blizzard, nearly a year after the pending deal was first announced. The UK’s Competition and Markets Authority has been one of the most vocally opposed to the acquisition. While country after country, as well as the EU, voiced its approval, theCMA blocked the Activision Blizzard deal in April 2023, forcing Microsoft back to the drawing board to come up with a new version of the agreement.
The CMA’s concerns centered on Xbox Game Pass and Microsoft’s already-established dominance in the cloud gaming space. The Activision Blizzard deal in its original iteration could have given the tech giant an unfair advantage in the budding market, said the trade regulator. The amended version of thedeal gave full cloud gaming rights of all ABK IPs to Ubisoft, an uninterested third party that will handle licensing of Activision Blizzard PC and console titles for the next 15 years, presumably even overseeing what will come to Xbox Game Pass.
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In light of the amended agreement, theCMA gave preliminary approval of the Activision Blizzard acquisitionat the end of September, so this final clearing of the deal was not entirely unexpected. Until now, however, the CMA’s ultimate decision has been anything but certain. It was also unknown what Microsoft and Activision Blizzard would do if the UK authority blocked the deal a second time, or if there were workarounds that would allow the acquisition to close while bypassing the UK market.
In a statement, the UK’s trade regulator said, “The CMA has decided to give Microsoft Corporation consent to acquire Activision Blizzard, Inc. excluding Activision’s cloud streaming rights outside of the European Economic Area.” This approval is contingent on Activision successfully handing over those rights to a third party, namely Ubisoft, before theMicrosoft/ABK merger closes. The Xbox company’s willingness to amend the agreement and give up cloud streaming rights was a “game changer,” according to the CMA, that will “stop Microsoft from locking up competition in cloud gaming as this market takes off.”
Though this concession by the CMA is a major leap forward in the deal going through, the US’sFTC still stands as a potential roadblock to the ABK deal. That regulatory body has not given up on its plan to stop the acquisition and is currently appealing a judge’s July decision to not grant an injunction. It’s long been assumed that the two gaming giants would proceed with the merger despite the FTC, however, and Microsoft President Brad Smith has said that the CMA’s decision was the final regulatory hurdle, implying that the US regulator’s stance is ultimately not a hindrance in closing the deal.
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Sources:CMA 1,2
