Microsoft’s Bid for Activision Blizzard Faces UK Regulatory Hurdle
Microsoft’s bid to acquire video game maker Activision Blizzard is facing a regulatory hurdle in the UK. The Competition and Markets Authority (CMA) has opened an investigation into the proposed $69 billion deal, which represents the final major obstacle to closing one of the biggest tech deals in history. The CMA has until October 18 to decide whether to approve the deal or escalate its preliminary investigation into a more in-depth review.
While Microsoft and Activision Blizzard have already secured approvals from antitrust authorities in 40 countries, including the European Union, the purchase has been held up in the UK due to concerns about competition in the emerging cloud gaming market. The UK authorities moved to block the deal earlier this year, but Microsoft has now made some changes to the agreement in an effort to address these concerns.
Under the restructured deal, Microsoft has agreed to sell cloud streaming rights outside of the European Economic Area (EEA) to French game studio Ubisoft Entertainment. This means that all current and new Activision games released over the next 15 years will be available for cloud gaming outside of the EEA. The EEA includes the 27 nations of the European Union, as well as Norway, Iceland, and Liechtenstein.
Microsoft President Brad Smith, in a blog post, stated that the company’s decision to sell off the streaming rights is substantially different from what was put on the table previously. However, Activision CEO Bobby Kotick downplayed the impact of this change, stating that nothing substantially changes for the company.
The CMA had delayed its final order to block the deal in order to consider new information. This included a decision by the EU to accept Microsoft’s pledge to automatically license Activision games to cloud gaming platforms, as well as a licensing deal between Microsoft and Sony, the maker of the PlayStation console. Despite these developments, the CMA has stated that its original decision to block the deal remains unchanged.
The CMA’s decision to launch a new investigation instead of approving the deal was unexpected and raises the possibility of another extensive review. However, experts believe that Microsoft would not have pursued this new course without confidence in eventually receiving regulatory approval.
It remains to be seen how the CMA will assess the restructured deal and its impact on competition. The regulator has promised to objectively evaluate the details and consider third-party comments as part of its assessment. The outcome of the investigation will play a significant role in determining the fate of Microsoft’s bid for Activision Blizzard.
