Microsoft’s ambitious $68.7 billion acquisition of gaming giant Activision Blizzard was on the ropes not too long ago, but it’s now poised to overcome its final major hurdle. The Competition and Markets Authority (CMA) in the UK has just declared that Microsoft’s revised agreement has taken significant strides in addressing previous concerns, paving the way for potential approval of the deal. While the agreement is still under consultation, the prospect of receiving the green light is now looking increasingly promising.
The CMA’s statement underscores the significant changes brought about by the restructured deal. In particular, it highlights the sale of Activision’s cloud streaming rights to Ubisoft as a pivotal move. This sale will ensure that vital content, including popular titles such as Call of Duty, Overwatch, and World of Warcraft, remains outside Microsoft’s control in the realm of cloud gaming.
Originally, the UK regulator had blocked the merger, expressing fears that it would grant Microsoft a dominant 60 to 70 percent share of the cloud gaming market, potentially creating a monopoly situation. Such a scenario could have given Microsoft the incentive to withhold games from competitors and significantly stifle competition in this burgeoning sector.
In response to these concerns, Microsoft took proactive steps to win the UK’s approval. Last month, the tech giant announced its intention to sell Activision Blizzard’s streaming rights to Ubisoft. If the merger successfully proceeds, it will entail the transfer of “cloud streaming rights for all current and future Activision Blizzard PC and console games over the next 15 years to Ubisoft Entertainment… in perpetuity.” Ubisoft, in a separate statement, confirmed that these titles would be available across a variety of platforms and services.
The CMA’s verdict on the revised deal is that it “substantially addresses most concerns,” but it still seeks assurances that the provisions surrounding the sale of Activision’s cloud streaming rights to Ubisoft cannot be easily bypassed, terminated, or left unenforced. Microsoft has responded by offering remedies to ensure the enforceability of these rights, which, according to the CMA, should resolve any remaining concerns.
Microsoft has weathered regulatory challenges on multiple fronts throughout this acquisition process. The US Federal Trade Commission (FTC) initially attempted to block the merger, but its efforts were rebuffed by a federal court. Subsequently, the UK’s CMA rejected the deal, but Microsoft appealed the decision and was granted additional time to present an amended deal. The sale of streaming rights to Ubisoft emerged as a significant concession in response to these regulatory obstacles, and it appears to have swayed opinions in Microsoft’s favor. The CMA’s consultation on Microsoft’s proposed remedies is set to conclude on October 6, at which point we’ll have a clearer picture of the deal’s fate.
Frequently Asked Questions (FAQs) about Microsoft’s Acquisition of Activision Blizzard
Q: What is the significance of Microsoft’s acquisition of Activision Blizzard?
A: Microsoft’s acquisition of Activision Blizzard is a significant move in the gaming industry. It involves Microsoft purchasing the well-known gaming company, Activision Blizzard, for a whopping $68.7 billion. This acquisition is poised to have a major impact on the gaming landscape, potentially reshaping the industry’s dynamics.
Q: Why did the UK’s Competition and Markets Authority (CMA) initially block the merger?
A: The CMA initially blocked the merger over concerns that it would result in Microsoft having a dominant share (60 to 70 percent) of the cloud gaming market. This would potentially create a monopoly situation, which could lead to Microsoft withholding games from competitors and undermining competition within the growing cloud gaming market.
Q: How did Microsoft address the CMA’s concerns to gain approval?
A: To address the CMA’s concerns and increase the chances of approval, Microsoft made a significant concession. They decided to sell Activision Blizzard’s streaming rights to Ubisoft. This move ensures that key gaming content, including popular titles like Call of Duty, Overwatch, and World of Warcraft, will not fall under Microsoft’s control in the realm of cloud gaming.
Q: What is the current status of the merger approval process in the UK?
A: As of now, the revised agreement between Microsoft and Activision Blizzard is still under consultation by the CMA. While the CMA has indicated that the deal has made substantial progress in addressing its concerns, the final approval is pending. The consultation period is set to conclude on October 6, at which point we’ll have a better understanding of the deal’s fate in the UK.
Q: Have there been regulatory challenges in other countries regarding this merger?
A: Yes, there have been regulatory challenges in the United States as well. The US Federal Trade Commission (FTC) initially sought to block the merger but was later denied by a federal court. This indicates that regulatory scrutiny has been a significant aspect of Microsoft’s acquisition journey.
Q: What are the potential implications of this acquisition for the gaming industry?
A: If the acquisition receives final approval, it could reshape the gaming industry. Microsoft, already a major player with its Xbox platform and cloud gaming service (Xbox Cloud Gaming), would gain even more influence and access to a vast library of popular game franchises through Activision Blizzard. This could lead to new developments and strategies in the gaming market, impacting both players and the industry as a whole.
More about Microsoft’s Acquisition of Activision Blizzard
- Microsoft’s $68.7 Billion Acquisition of Activision Blizzard
- UK’s Competition and Markets Authority (CMA)
- Ubisoft
- US Federal Trade Commission (FTC)
- Xbox Cloud Gaming
3 comments
Wonder if this deal will bring some rockin’ tunes into the gaming world, or if it’s all about the games.
Mergers, FTC, CMA, it’s all alphabet soup! But MS is, like, taking big strides in gaming, yo.
so, like, the UK folks weren’t cool with MS having a monopoly in the cloud gaming gig, but they said OK if MS gives some games to Ubisoft, that’s, like, cool.