This week is set to be pivotal for Microsoft as they eagerly await the outcome of their proposed acquisition of Activision Blizzard, a monumental $68.7 billion deal that, if successful, would represent the largest transaction ever witnessed in the gaming industry. The announcement of this potential merger in January 2022 sent shockwaves throughout entertainment and technology.
The United Kingdom’s Competition and Markets Authority (CMA) is scheduled to deliver its final decision on Wednesday, April 26th. Throughout the negotiations, the CMA has emerged as the most formidable obstacle in Microsoft’s path, expressing concerns about the acquisition’s competitive implications as far back as September 2022. Following this, the CMA initiated an in-depth investigation into the proposed purchase of Activision Blizzard. A mere two months ago, the situation seemed particularly bleak for Microsoft when the CMA issued a press release stating that the potential deal could adversely impact UK gamers, both in the rapidly growing cloud gaming market and in the well-established console market. This is due, in part, to the possibility that Microsoft could choose to make the immensely popular Call of Duty franchise exclusively or partially available on Xbox consoles.
Microsoft has consistently refuted such claims, arguing that restricting the Call of Duty franchise in such a way would not make financial sense. In an unexpected turn of events, the CMA reversed its position on the competition concerns related to the console market just last month. They conceded that it would be extremely detrimental for Microsoft to remove Call of Duty from PlayStation platforms and as a result, withdrew their apprehensions regarding the console market.
While this decision did not directly impact the cloud market concerns, Microsoft has been diligently working to address these issues. They have successfully negotiated four separate 10-year agreements to bring all of their games, including those of Activision Blizzard (pending the approval of the acquisition), to various cloud gaming services such as GeForce NOW, Boosteroid, Ubitus, and UK Internet service provider EE. Consequently, Microsoft’s prospects of successfully navigating the regulatory hurdles and securing the deal appear significantly brighter, as reported by the Financial Times.
With these developments, the sole remaining barrier to the acquisition would be the United States Federal Trade Commission (FTC), which initiated legal action in December to prevent the deal from proceeding. An evidentiary hearing is anticipated to occur in August; however, the FTC may reassess its strategy of engaging in a comprehensive court battle as the likelihood of losing increases in light of approvals from numerous other countries. It is worth noting that authorities in Japan, South Africa, Chile, Brazil, Serbia, and Saudi Arabia have already approved the deal.
