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Britain’s top competition watchdog on Friday gave the green light to Microsoft’s proposed $69 billion takeover of gaming firm Activision Blizzard, removing the last major hurdle for the deal to shut.
The Competition and Markets Authority said it had cleared the deal for Microsoft to purchase Activision but without cloud gaming rights.
“The brand new deal will stop Microsoft from locking up competition in cloud gaming as this market takes off, preserving competitive prices and services for UK cloud gaming customers,” the regulator said in a press release Friday.
The CMA was the ultimate regulator holding up the deal. Microsoft should now give you the option to shut the acquisition.
The choice marks a significant U-turn from the CMA, the staunchest critic of the takeover, which effectively blocked the deal earlier this yr over concerns that the acquisition would hamper competition within the nascent cloud gaming market.
Microsoft first proposed to accumulate Activision in January 2022, but has since faced regulatory challenges within the U.S., Europe and the U.K.
In July, the CMA said it could consider a restructured acquisition from Microsoft to allay its concerns. Microsoft offered a spate of concessions, which centered around divesting the cloud rights of Activision games to French game publisher Ubisoft Entertainment.
“It can allow Ubisoft to supply Activision’s content under any business model, including through multigame subscription services. It can also help to be certain that cloud gaming providers will give you the option to make use of non-Windows operating systems for Activision content, reducing costs and increasing efficiency,” the CMA said.
The U.K.’s regulatory U-turn
Regulators globally were concerned that the takeover would cut back competition within the gaming market, particularly around cloud gaming. Microsoft could also take key Activision games like Call of Duty and make them exclusive to Xbox and other Microsoft platforms, the officials argued.
Cloud gaming is seen as the following industry frontier, offering subscription services that allow people to stream games just as they’d movies or shows on Netflix. It could even remove the necessity for expensive consoles, with users playing the games on PCs, mobile and TVs as an alternative.
Microsoft logo is seen on a smartphone placed on displayed Activision Blizzard logo on this illustration taken January 18, 2022.
Dado Ruvic | Reuters
Specifically, the U.K. regulator argued when it blocked the takeover in April that allowing the deal to go ahead would give Microsoft a robust position within the nascent cloud gaming market.
Authorities within the European Union were the primary major regulator to clear the deal in May, after Microsoft offered concessions to the EU.
On the time, the CMA said it stood by its initial decision to dam the deal since the compromises presented to the EU would allow Microsoft to “set the terms and conditions for this marketplace for the following ten years.”
Meanwhile, within the U.S., the Federal Trade Commission was fighting a legal battle with Microsoft in an effort to get the Activision takeover scrapped. In July, nevertheless, a judge blocked the FTC’s try and achieve this, clearing the best way for the deal to go ahead within the U.S.
Just hours later, the CMA said it was “ready to think about any proposals from Microsoft to restructure the transaction” and allay the regulator’s concerns.
Microsoft concessions to the UK
In August, Microsoft offered concessions to the CMA in its second try and get the deal cleared.
Under the restructured transaction, Microsoft is not going to acquire cloud rights for existing Activision PC and console games, or for brand new games released by Activision throughout the next 15 years. As a substitute, these rights might be divested to Ubisoft Entertainment before Microsoft’s acquisition of Activision, in line with the CMA.
“With the sale of Activision’s cloud streaming rights to Ubisoft, we have made sure Microsoft cannot have a stranglehold over this necessary and rapidly developing market,” Sarah Cardell, CEO of the CMA said in a press release.
“As cloud gaming grows, this intervention will ensure people get more competitive prices, higher services and more alternative. We’re the one competition agency globally to have delivered this end result.”
While the U.K. approved the deal, the CMA, which has been growing increasingly aggressive in its actions to scrutinize big mergers, fired a parting shot to Microsoft during which it slammed the tech giant’s negotiation tactics.
“Businesses and their advisors ought to be in little doubt that the tactics employed by Microsoft aren’t any solution to engage with the CMA,” Cardell said.
“Microsoft had the prospect to restructure during our initial investigation but as an alternative continued to insist on a package of measures that we told them simply would not work. Dragging out proceedings in this fashion only wastes money and time.”
‘Final regulatory hurdle’
The CMA was the last major regulator holding up the Activision takeover.
Microsoft President Brad Smith said on X, formerly often called Twitter, that he’s “grateful” for the CMA’s review and decision.
“We now have now crossed the ultimate regulatory hurdle to shut this acquisition, which we imagine will profit players and the gaming industry worldwide,” Smith said.
Bobby Kotick, CEO of Activision Blizzard, told employees in an email that he’s “excited for our next chapter along with Microsoft and the countless possibilities it creates for you and for our players.”
Throughout the regulatory scrutiny, Microsoft had been trying to indicate regulators and its closest competitors that it is going to not make games exclusive.
The U.S. tech giant signed a deal in February to bring Xbox games to Nvidia’s cloud gaming service and struck a 10-year deal to bring Call of Duty to Nintendo players on the identical day as Xbox, “with full feature and content parity.” Microsoft also signed a deal in July with its biggest rival Sony to bring Call of Duty to the Japanese firm’s PlayStation gaming console.