Microsoft is edging closer to sealing its $69 billion acquisition of video game maker Activision Blizzard, a transaction that has drawn global antitrust scrutiny and set a precedent for the tech industry’s mega-deals.
The Competition and Markets Authority (CMA) in Britain, the final authority to approve, has stated that both companies have taken substantial steps to address lingering antitrust concerns.
The CMA initially opposed the deal, fearing it would stifle competition.
However, it changed its stance after Microsoft pledged not to purchase a portion of Activision’s business related to cloud gaming, a nascent yet promising sector.
This acquisition, announced in January 2022, has faced intense scrutiny from antitrust authorities worldwide, serving as a litmus test for whether regulators would greenlight a major tech merger amid worries about the industry’s dominance.
The merger would reshape the video game market by combining Microsoft’s Xbox business with Activision, the publisher behind popular games like Call of Duty and World of Warcraft.
Despite stiff regulatory opposition on both sides of the Atlantic, Microsoft, with experience in navigating antitrust disputes dating back to the 1990s, managed to progress. In July, the company won a legal battle against the Federal Trade Commission’s attempt to block the deal.
The European Union, usually stringent with American tech firms, approved the deal in May.
Ioannis Kokkoris, a competition law and economics professor, noted Microsoft’s strategic approach throughout the process.
The CMA’s initial concern was that merging a top-selling console maker with a renowned game publisher could hinder the growth of cloud gaming technology.
While still a niche market, cloud gaming enables users to stream games on various devices, reducing the need for traditional consoles.
To address this, Microsoft agreed to transfer cloud streaming licensing rights for all existing and new Activision Blizzard games to Ubisoft Entertainment, a rival publisher, for 15 years.
This move prevents Microsoft from exclusively releasing Activision games on its streaming service.
The CMA now seeks public input until October 6 on the proposed remedies before making a final decision on the deal’s approval.
Microsoft’s president, Brad Smith, expressed encouragement regarding the CMA’s review process, while Activision Blizzard also welcomed the development. Both companies aim to close the deal by October 18.
The tech industry’s growing power continues to face government scrutiny. This month, the U.S. Justice Department and several states began a trial alleging Google’s abuse of power in the online search market. Meanwhile, EU regulators announced the reimposition of a $400 million fine on Intel for market power abuse in semiconductors.
Investigations into anticompetitive practices involving Apple, Google, Meta, and Microsoft are also ongoing in the EU.
This trend is evident with Cisco’s $28 billion acquisition of cybersecurity firm Splunk and Broadcom’s $61 billion deal to acquire software company VMware.