Topline
Britain’s competition watchdog signaled Friday it is willing to accept Microsoft’s latest offer to buy gaming giant Activision Blizzard for $69 billion, a stunning reversal after the regulator almost stopped the takeover earlier this year and clearing the way for the biggest deal in gaming history.
Microsoft is trying to buy Activision.
Key Facts
Britain’s Competition and Markets Authority (CMA) on Friday said Microsoft’s revised bid to buy the gaming developer “opens the door to the deal being cleared.”
The new deal “substantially addresses previous concerns” that prompted the regulator to block the takeover in the past, the CMA said in a statement.
Microsoft had previously failed to allay the watchdog’s concerns that the acquisition of one of the most popular video game developers in the world—known for franchises like Call of Duty, Overwatch and World of Warcraft—would stifle competition in the nascent cloud gaming market.
Cloud gaming rights held by Activision outside of Europe will be sold to French publisher Ubisoft for the next 15 years as part of Microsoft’s latest proposal, which the CMA said would maintain “open competition as the market for cloud gaming develops over the coming years.”
While the CMA said it had some “limited residual concerns” over the new deal, namely whether certain aspects of selling rights to Ubisoft could be “circumvented, terminated, or not enforced,” a provisional assessment suggests Microsoft’s proposed remedies will address the issues.
Colin Raftery, a senior director of mergers at the CMA, said the proposal is a new and “substantially different deal, which keeps the cloud distribution of these important games in the hands of a strong independent supplier, Ubisoft, rather than under the control of Microsoft.”
Crucial Quote
In a statement, CMA chief executive Sarah Cardell criticized Microsoft’s handling of the deal and insisted the regulator’s “position has been consistent throughout” the process. Though the tech giant restructured the deal in response to the CMA’s objections, Cardell said “it would have been far better… if Microsoft had put forward this restructure during our original investigation. This case illustrates the costs, uncertainty and delay that parties can incur if a credible and effective remedy option exists but is not put on the table at the right time.”
What To Watch For
The CMA said it has now opened a consultation on the deal and Microsoft’s proposed remedies that will run until October 6. A final decision on the matter is expected before October 18, the deadline for Microsoft and Activision’s extended merger agreement. Microsoft vice chair and president Brad Smith said the company is “encouraged by this positive development” and will continue to work on securing approval to close before the deadline.
Key Background
The CMA was the last major legal hurdle to the deal’s approval and Microsoft submitted a new proposal to address the antitrust regulator’s concerns in August. It has taken the tech giant more than a year to get to this point after it first announced plans to acquire Activision for around $69 billion in early 2022. The merger was initially attacked by Microsoft’s competition in the gaming sector, particularly PlayStation maker Sony, which feared it would keep popular content like Call of Duty away from users on its platform. Microsoft has since courted rivals like Nintendo and Sony with licensing agreements and while major regulators were initially divided on the matter, the European Union cleared the deal earlier this year and the company trounced the U.S. regulator, the Federal Trade Commission, in court when it tried to block the deal. The CMA ,
Further Reading
The newfound influence of the UK’s competition watchdog (FT)
Microsoft Renews Bid To Buy Activision Amid Competition Concerns (Forbes)
