Microsoft logo in the background with a phone with the Activision logo

UK regulator changes course on Microsoft’s £55bn Activision takeover

Image credit: Dreamstime

The UK’s competition watchdog has agreed to work with Microsoft to facilitate its acquisition of Activision Blizzard, after a US judge rejected a request from US regulators to block the deal.

Microsoft is a step closer to finalising its acquisition of video game-maker Activision Blizzard, following developments in its legal battles in the US and UK.

In Britain, the Competition and Markets Authority (CMA) has agreed to pause its legal battle with Microsoft and begin negotiations that would address the regulator's competition concerns regarding the cloud gaming market. 

“We stand ready to consider any proposals from Microsoft to restructure the transaction in a way that would address the concerns set out in our final report," a CMA spokesperson said.

“In order to be able to prioritise work on these proposals, Microsoft and Activision have agreed with the CMA that a stay of litigation in the UK would be in the public interest and all parties have made a joint submission to the Competition Appeal Tribunal to this effect.”

Microsoft has responded by stating that, while they “ultimately disagree with the CMA’s concerns" the company is "considering how the transaction might be modified in order to address those concerns in a way that is acceptable to the CMA.”

In the same week, Microsoft also won a separate case against the US Federal Trade Comission (FTC), after a federal judge in California refused to block the multi-billion dealwhich would see the company acquire hit titles such as Call of Duty and Candy Crush. 

The FTC request was made as a means of preventing the two companies from closing the deal while litigation was still ongoing. However, in a redacted opinion, Judge Jacqueline Scott Corley said she did not think the regulator would win in its case.

"The FTC has not shown it is likely to succeed on its assertion the combined firm will probably pull Call of Duty from Sony PlayStation, or that its ownership of Activision content will substantially lessen competition in the video game library subscription and cloud gaming markets," Scott Corley wrote.

Microsoft president Brad Smith said the company was "grateful" for the quick decision". 

"Our merger will benefit consumers and workers. It will enable competition rather than allow entrenched market leaders to continue to dominate our rapidly growing industry," Bobby Kotick, chief executive of Activision Blizzard, said after the ruling.

The FTC still has until Friday, July 14th to appeal the decision. 

"We are disappointed in this outcome given the clear threat this merger poses to open competition in cloud gaming, subscription services, and consoles," FTC spokesperson Douglas Farrar said. "In the coming days we'll be announcing our next step to continue our fight to preserve competition and protect consumers."

Microsoft first announced its multi-billion deal to buy Activision in January 2022. The deal has been hailed as the “biggest takeover in tech history” and is already the largest acquisition in the history of the video game industry, at least in theory at this stage.  

UK regulators had blocked the deal, expressing concerns that the acquisition would result in higher prices, fewer choices and less innovation for the video game market, as Microsoft, maker of the Xbox, would obtain the power to deny rivals access to Activision's games. 

The deal has been approved by European Union officials, who stressed that Microsoft has offered to provide 10-year free licensing deals of Activision PC and console games to competitors. As such, Microsoft could now finalise the deal with Activision in a matter of days, ahead of a July 18 contractual deadline. 

The CMA has estimated that Microsoft controls around 60 to 70 per cent of the global cloud gaming services, which are forecast to be worth up to £11bn globally and £1bn in the UK by 2026. 

Shares in Activision surged more than 10 per cent after the news was made public. 

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