Home Microsoft UK’s CMA Appears to Drop Final Hurdle in Microsoft/Activision Merger

UK’s CMA Appears to Drop Final Hurdle in Microsoft/Activision Merger

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The Microsoft Corp.’s acquisition of Activision Blizzard Inc. — the biggest gaming deal ever at $69 billion — has cleared a significant hurdle, potentially paving the way for the finalization of the deal. The UK’s Competition and Markets Authority (CMA) indicated its willingness to greenlight the acquisition after Microsoft agreed to sell some gaming rights to French publisher Ubisoft Entertainment SA. The regulatory body will continue to consult on the offer until October 6, but the preliminary approval has been met with optimism by both Microsoft and Activision.

A Stunning Turnaround

Initially, the deal faced substantial obstacles, including a veto from the UK’s CMA earlier this year, citing concerns that the merger could lead to higher prices, fewer choices, and less innovation in the gaming sector. However, the tides changed when Microsoft won a court challenge against the Federal Trade Commission, and the European Union cleared the deal with behavioral remedies in May. This left the CMA as the last significant obstacle.

“The restructured deal keeps the cloud distribution of these important games in the hands of a strong independent supplier, Ubisoft, rather than under the control of Microsoft,” said Colin Raftery, a senior director of mergers at the CMA.

A Strategic Cornerstone for Microsoft

The deal is particularly crucial for Microsoft as it looks to bolster its mobile gaming business. Phil Spencer, the head of Xbox, now faces the challenge of implementing a strategy that was initially focused on the metaverse — a focus that has since receded.

Market Reactions

The preliminary approval resulted in modest market shifts: Microsoft shares remained relatively stable, while Activision shares rose by 1.3%. Ubisoft’s shares saw a more substantial increase, climbing as high as 3.26% in Paris.

Remarks from Key Players

“We are encouraged by this positive development in the CMA’s review process,” said Microsoft executive Brad Smith. He added that the company aims for final approval by October 18.

Activision CEO Bobby Kotick expressed similar sentiments, stating that the CMA’s preliminary approval was “critical to completing the deal.”

Implications for the Cloud Gaming Sector

The revised offer has been designed to preserve competition in the cloud gaming market. It prevents Microsoft from exclusively releasing Activision’s key content on its cloud gaming service, and instead places some of those rights in the hands of Ubisoft.

Sarah Cardell, the CMA’s chief executive, commented, “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.”

Unveiling the Road Ahead

With the UK’s CMA appearing to drop the final obstacle, Microsoft’s acquisition of Activision Blizzard seems to be on a smoother path than ever before. Still, the deal’s potential impacts, such as increased competition and concerns over higher prices, will continue to be topics of heated debate in the industry.

As regulatory walls seemingly crumble, the gaming community and industry stakeholders await what could be a historic transformation in the gaming landscape. Whether this merger will bring more joy or less choice to gamers worldwide is a story that remains to be written.

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