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Microsoft, Activision Blizzard to seal tie-up
Published on: Saturday, October 14, 2023
By: AFP
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Microsoft, Activision Blizzard to seal tie-up
Tom Holland attends the Call of Duty Black Ops III launch at One Mayfair, back in November of 2015 in London. (Getty Images)
LONDON: Microsoft and Activision Blizzard, maker of the “Call of Duty” video game, announced Friday they were set to seal one of the biggest technology tie-ups after overcoming a final hurdle. 

British regulators have approved Microsoft’s $69-billion takeover, having blocked the deal in April over competition concerns.

The Competition and Markets Authority said in a statement Friday that it had cleared “the new deal for Microsoft to buy Activision without cloud gaming rights” after concluding “it would preserve competitive prices and better services”.

Activision Blizzard chief executive Bobby Kotick said the two companies had “all regulatory approvals necessary to close (the deal) and we look forward to bringing joy and connection to even more players around the world”. 

Microsoft vice chair and president Brad Smith thanked the CMA for its “thorough review” and approval. 

“We have now crossed the final regulatory hurdle to close this acquisition, which we believe will benefit players and the gaming industry worldwide,” he added in a statement.

Microsoft launched its blockbuster takeover in January last year, an acquisition that would make it the world’s third-largest gaming company by revenue, but it faced stiff scrutiny from regulators, including also in the United States.

The CMA had blocked the deal over fears it would damage competition in the fast-growing cloud gaming sector, where games are bought virtually and players can use a variety of devices rather than just consoles.

But it dropped those objections last month ahead of its formal approval Friday.

Microsoft, which makes the Xbox console and already has a stable of games under its belt including “Minecraft”, “Elder Scrolls” and “Fallout”, is already the dominant player in the cloud-gaming world—its Game Pass service claims 25 million subscribers.

The original deal would have seen hugely popular Activision games including “Call of Duty”, “Overwatch” and “World of Warcraft” added to its cloud roster, which was too much for the UK regulator to stomach.

Under the new deal, Microsoft has agreed it would not take control of the cloud portion of Activision’s business, which will be transferred to French studio Ubisoft for 15 years.

“With the sale of Activision’s cloud streaming rights to Ubisoft, we’ve made sure Microsoft can’t have a stranglehold over this important and rapidly developing market,” CMA chief executive Sarah Cardell said Friday. 

“As cloud gaming grows, this intervention will ensure people get more competitive prices, better services and more choice. We are the only competition agency globally to have delivered this outcome.”

She again hit out over Microsoft’s handling of the regulatory process and warned other companies over employing similar tactics.

“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,” she added.

Alex Haffner, competition partner at UK law firm Fladgate, said “the question that is left hanging... is whether this case shows a merger oversight system in the UK that is too dogmatic”.

Aside from the concerns over cloud gaming, regulators had also worried that the initial deal would have allowed Microsoft to make Activision’s games exclusive to its Xbox.

Microsoft and Sony, which had previously tried to block the Activision deal, agreed in July to keep releasing “Call of Duty” on the PlayStation.

The European Union cleared the deal in May while the US antitrust regulator recently paused its attempt to block the buyout following a setback in court.

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