The UK’s Competition and Markets Authority (CMA) has granted its approval for Microsoft’s proposed $69 billion acquisition of gaming giant Activision Blizzard. This marks the final regulatory hurdle for the deal to close, a decision met with significant anticipation in the gaming industry.
Microsoft Executes Brilliant Strategy to Gain Approval
Microsoft had its vision set on acquiring Activision for a while now. The gaming company, which developed popular games such as Call of Duty, Overwatch, and World of Warcraft, could turn Microsoft into an uncontestable powerhouse in cloud gaming.
The CMA’s initial stance on this acquisition was contentious, with concerns that the deal would stifle competition in the burgeoning cloud gaming market. However, Microsoft responded with a pivotal move: It offered to divest the cloud gaming rights for Activision games to French gaming publisher Ubisoft Entertainment.
This shift strategy aims to maintain competitive pricing and services for UK cloud gaming customers. The move, executed in September, helped ensure that Microsoft doesn’t monopolize the gaming market.
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Microsoft’s journey to secure this deal has been fraught with regulatory challenges in the U.S., Europe, and the UK. The European Union granted clearance to the deal earlier, following concessions from Microsoft.
In the U.S., the Federal Trade Commission faced legal hurdles in its attempt to prevent the acquisition. A judge ultimately cleared the path for the deal to proceed, setting the stage for the CMA’s U-turn.
Numerous Concessions Finally Pay Off
The crux of the contention lay in the emerging world of cloud gaming, where services like Netflix for games could change the way people play. This technology potentially eliminates the need for expensive consoles, enabling gaming on PCs, mobile devices, and TVs. If remain unchecked,giants like Microsoft and Netflix could stifle competition.
To address the CMA’s concerns and secure regulatory approval, Microsoft made substantial concessions. Among them is a concession to do without cloud gaming rights.
This helps ensure that the cloud rights for existing and new Activision games would not fall under their control. Instead, these rights were transferred to Ubisoft Entertainment, safeguarding competition and consumer choice in the cloud gaming landscape.
In a press release, the UK Government announced that the modified terms will promote more competition in the gaming market.
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Microsoft’s President, Brad Smith, expressed gratitude for the CMA’s review and decision. He emphasized that this acquisition is expected to benefit players and the gaming industry globally.
Bobby Kotick, CEO of Activision Blizzard, shared his excitement about the possibilities this partnership with Microsoft opens up for both players and the company.
