Microsoft’s ambitious bid to acquire gaming giant Activision Blizzard has taken a significant stride towards completion of this signficant M&A deal. The UK’s Competition and Markets Authority (CMA) has provisionally accepted the proposed amendments to its US $75 billion takeover of the renowned “Call of Duty” developer. This development comes after a series of regulatory obstacles that have loomed over the world’s largest video game deal.
Addressing Regulatory Concerns
The CMA, which previously blocked the merger in April, had expressed concerns about the potential adverse impact of the takeover on competition. In response, both Microsoft and Activision Blizzard submitted a revised merger agreement aimed at addressing the CMA’s apprehensions. The primary concern was whether the merger would harm competition in the industry.
The pivotal change proposed by Microsoft and Activision Blizzard in their revised pitch to the CMA involved a deal to sell Activision’s cloud streaming rights to the French-based gaming rival, Ubisoft. Under these terms, Microsoft would be restricted from exclusively releasing Activision’s games, including popular titles like “World of Warcraft” and “Diablo,” on its own cloud streaming service, Xbox Cloud Gaming. Instead, these games would continue to be available on Xbox Cloud Gaming alongside offerings from competitors.
On the way to final approval
The CMA expressed cautious optimism regarding these amendments, stating that they substantially addressed their initial concerns. However, some “limited residual concerns” remain, which could potentially be circumvented, terminated, or not enforced.
The CMA’s new consultation period will extend until October 6, setting the stage for the final approval process before the extended deadline for completing the deal on October 18.
Despite the hurdles and delays, Microsoft remains optimistic about the deal’s eventual approval and completion. The company’s President, Brad Smith, expressed encouragement over the positive developments in the CMA’s review process and reaffirmed their commitment to addressing any remaining concerns.
This provisional approval marks a significant milestone in the long and complex journey towards finalizing the merger between Microsoft and Activision Blizzard.
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