Microsoft’s $68.7B Activision Acquisition Secures Approval From UK Regulator


In a significant development, Microsoft’s long-awaited acquisition of gaming giant Activision has cleared its final hurdle, as the U.K.’s Competition and Markets Authority (CMA) gave its approval to a restructured deal. This move comes after the CMA raised concerns about Microsoft’s potential dominance in the cloud gaming market.

Key Takeaway

Microsoft’s acquisition of Activision has received final approval from the U.K.’s regulator, the CMA, after the introduction of a restructured deal addressing concerns about Microsoft’s potential dominance in the cloud gaming market.

Cloud-Streaming Rights Addressed in the Restructured Deal

The key factor in Microsoft’s success in securing approval lies in its concession regarding Activision’s cloud-streaming rights. Instead of selling these rights to Microsoft, they will now be acquired by Ubisoft, a prominent French video game publisher. Ubisoft will have exclusive cloud-streaming rights for all PC and console games by Activision for the next 15 years in markets outside the European Economic Area (EEA). Within the EEA, Ubisoft will receive a non-exclusive license to sell, distribute, and sublicense entitlements to play cloud-streaming versions of Activision’s games. This means that Microsoft will also have access to cloud-streaming rights for Activision games in Europe.

The CMA’s chief executive, Sarah Cardell, emphasized the significance of the restructured deal, stating that it prevents Microsoft from having a stranglehold on the growing cloud gaming market. Cardell believes that this intervention will lead to more competitive prices, improved services, and greater choice for consumers. She also highlighted that the CMA is the only competition agency globally to achieve this outcome.

The Journey to Approval

Microsoft’s intention to purchase Activision was announced in January 2022, with the deal valued at a staggering $68.7 billion. This acquisition would position Microsoft as the third-largest gaming company globally based on revenue, trailing only Tencent and Sony. While the European Commission (EC) eventually approved the deal with certain conditions, and the Federal Trade Commission (FTC) in the U.S. could not block it despite their efforts, securing the U.K.’s approval has been an arduous process.

The CMA consistently voiced concerns that the acquisition would significantly weaken competition in the cloud gaming market. They argued that Microsoft’s existing market advantage, driven by the widespread use of Windows and its substantial cloud infrastructure business, would allow the company to further solidify its already dominant position, accounting for a market share of 60% to 70%.

Although Microsoft had previously reached agreements to maintain Activision games on rival platforms such as Nintendo, Sony, and Steam for a decade, the CMA maintained that these proposals were insufficient to preserve the current competitive climate in the market.

As the deal faced continued scrutiny, Microsoft made concessions in August, offering to divest the cloud-streaming rights for all current and future Activision games to Ubisoft, a direct competitor of Activision. These concessions were seen as a crucial step towards addressing the CMA’s concerns. Last month, the U.K. indicated that the new proposal significantly alleviated its previous apprehensions and paved the way for final approval.

The CMA’s recent affirmation of the deal has a somewhat contradictory tone. On one hand, they acknowledge and express satisfaction with Microsoft’s willingness to make changes and regard them as a “gamechanger” that promotes competition. However, they are also critical of Microsoft’s tactics throughout the acquisition process, which extended over a 21-month period. Cardell cautioned businesses and their advisors not to employ similar tactics, noting that Microsoft had the opportunity to restructure earlier but continued to push for measures that were deemed insufficient by the CMA, consequently resulting in wastage of time and money.

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