U.K. Regulators Give Green Light to Gaming Industry’s Largest Merger
Microsoft’s restructured acquisition of Santa Monica video game giant Activision Blizzard has received clearance from U.K. regulators, marking a significant milestone in the deal’s progress. The move removes a major hurdle and paves the way for the gaming industry’s largest merger to date.
Original Concerns Addressed
Initially blocked by the U.K.’s Competition and Markets Authority (CMA) in April, the deal raised concerns about competition in cloud-based gaming within the country. However, under the new agreement, Microsoft will not acquire Activision’s cloud gaming rights. Instead, these rights will be sold to an independent third party, Ubisoft, a rival gaming firm.
This new arrangement ensures that Microsoft cannot limit access to Activision’s crucial content or withhold games from competitors, according to the CMA. Sarah Cardell, CEO of the Competition and Markets Authority, emphasized their consistent stance on preserving competition, innovation, and choice in cloud gaming. She stated, “In response to our original prohibition, Microsoft has now substantially restructured the deal, taking the necessary steps to address our concerns.”
Preserving Content Control
Microsoft’s plan to purchase Activision Blizzard, known for popular gaming franchises such as “Call of Duty” and “World of Warcraft,” was announced in 2022 for a whopping $68.7 billion. The CMA highlighted the significance of preventing Microsoft from gaining control over Activision’s cloud streaming rights. By selling these rights to Ubisoft, games like “Call of Duty,” “Overwatch,” and “World of Warcraft” remain free from Microsoft’s control in relation to cloud gaming.
Though the CMA still had some residual concerns, Microsoft has presented remedies that the authority believes will address those issues. The Competition and Markets Authority is currently seeking input on these remedies before making a final decision.
Merger Implications
Activision Blizzard CEO Bobby Kotick expressed the critical nature of gaining approval from the CMA in an email to employees. He stated, “This approval is critical to completing our merger. This transaction will help us accelerate our ambitions for the future of gaming and enable us to better serve our players.”
With the regulatory hurdle cleared, Microsoft and Activision Blizzard can now move forward with their merger plans, reshaping the gaming landscape and potentially revolutionizing the industry.