Microsoft initially proposed the acquisition in January 2022 but faced regulatory challenges in the US, Europe, and the UK. Regulators, including the UK’s CMA, expressed concerns about the potential reduction of competition in the gaming market, particularly in the emerging cloud game industry. The CMA’s decision represents a notable reversal, as it was a vocal critic of the takeover, having effectively blocked the deal earlier this year. The primary concern was that the acquisition could hinder competition in the emerging cloud gaming market.
In July, the CMA indicated its willingness to reconsider a restructured acquisition proposal from Microsoft to address its concerns. Microsoft responded with a set of compromises, focusing on giving up the cloud rights of Activision games to French game publisher Ubisoft Entertainment. Under the revised deal, Microsoft will not acquire cloud rights for existing Activision PC and console games or for new games released by Activision in the next 15 years. Instead, these rights will be granted to Ubisoft Entertainment before Microsoft acquires Activision.
We’ve cleared the new deal for Microsoft to buy Activision without cloud gaming rights.— Competition & Markets Authority (@CMAgovUK) October 13, 2023
In August, Microsoft made a concession that would see Ubisoft, instead of Microsoft, buy Activision’s cloud gaming rights.
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The CMA stated that this move prevents Microsoft from dominating the cloud gaming market, ensuring competitive prices and services for UK cloud gaming customers. Despite approving the deal, the CMA criticized Microsoft’s negotiation tactics, emphasizing that the company had the opportunity to restructure the transaction earlier in the investigation but insisted on measures that were deemed ineffective.
Microsoft’s President, Brad Smith, expressed gratitude for the CMA’s review and decision, stating that the approval marks the crossing of the final regulatory hurdle. Activision Blizzard’s CEO, Bobby Kotick, shared his excitement for collaborating with Microsoft, emphasizing the endless possibilities it creates for employees and players.
We’re grateful for the CMA’s thorough review and decision today. We have now crossed the final regulatory hurdle to close this acquisition, which we believe will benefit players and the gaming industry worldwide.— Brad Smith (@BradSmi) October 13, 2023
The deal’s closure is anticipated to impact the game industry worldwide significantly. The regulatory approval follows months of scrutiny, legal battles, and compromises made by Microsoft to address concerns raised by various regulatory bodies in different regions.