Call of Duty maker Activision Blizzard to be bought by Microsoft as UK regulator gives green light
The UK competition watchdog has joined other major regulators to give the go-ahead after French gaming company Ubisoft agreed to buy Activision’s cloud gaming rights.
Sarah Taaffe-Maguire
Business reporter @taaffems
Friday 13 October 2023 11:36, UK
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Microsoft’s bid for Call of Duty maker Activision Blizzard has been given UK approval, removing a last hurdle to the biggest-ever gaming deal.
The UK’s regulator, the Competition and Markets Authority (CMA), said it gave the go-ahead to after the restructured deal substantially addressed its earlier concerns.
Microsoft, who make the Xbox, announced the biggest gaming deal in history in early 2022, but the £56bn ($69bn) acquisition was blocked in April by Britain’s competition regulator.
It was concerned the US computing giant would gain too much control of the new cloud gaming market, but changes have since been made to the deal.
Last month the regulator appeared to hint the deal would get the go-ahead as French game maker, Ubisoft, agreed to acquire Activision’s cloud gaming rights, rather than Microsoft.
The $69bn video game deal explained2:05
Play Video – The $69bn video game deal explained
Microsoft announced plans to acquire Activision Blizzard in January last year, but the merger has been fraught with difficulty
But there was criticism for Microsoft by the head of the CMA. “Tactics employed by Microsoft are no way to engage with the CMA”, Sarah Cardell, CMA chief executive, said.
“Microsoft had the chance to restructure during our initial investigation but instead continued to insist on a package of measures that we told them simply wouldn’t work. Dragging out proceedings in this way only wastes time and money.”
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CMA ESTABLISHED ITSELF AS A TOUGH REGULATOR
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The US Federal Trade Commission was very much opposed but looked pretty powerless to stop the deal, so it was left to the CMA in this country to be the main opponent.
The CMA is keen to establish its credentials as a global regulator post-Brexit, because before, a lot of these deals would just get punted over to the European Commission to decide.
It had issues with cloud gaming competition in particular, and blocked the original deal that led to a furious reaction from both Microsoft and Activision Blizzard, who said that this rendered the UK closed to business.
Microsoft came up with a compromise in August, whereby they said that Activision’s cloud gaming rights would be handed over to Ubisoft, a French gaming company, for the next 15 years.
It’s on that basis that the CMA has approved the deal, but the CMA is very unhappy about it, they say that a lot of time and money could have been saved had Microsoft restructured the deal in the first place rather than dragging it out in this protracted manner.
I think they probably established themselves as a tough competition regulator in the process, though some people will accuse them of having caved into pressure from Microsoft, following their original decision to block the deal.
The worry was that Microsoft would lock up competition in cloud gaming as the market takes off, limiting competition and bringing up prices for UK cloud gaming customers.
The new deal, however, “will also help to ensure that cloud gaming providers will be able to use non-Windows operating systems for Activision content, reducing costs and increasing efficiency,” the CMA said.
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Play Video – Why the change of heart for CMA?
Competition and Markets Authority boss Sarah Cardell explained why it was no longer opposed to the Microsoft-Activision deal
Cloud-based games such as Candy Crush, World of Warcraft and Overwatch are also owned by Activision Blizzard. Cloud games are streamed from servers, rather than accessed from a disc or cartridge on to a gaming console or computer.
Regulators in Europe and the United States had given the green light to the merger, which had left the UK watchdog an outlier.
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The original refusal by the CMA prompted a flurry of lobbying to get the decision overturned with Chancellor Jeremy Hunt adding his voice to call for the deal to pass regulatory hurdles.
