Microsoft’s $69 billion acquisition of gaming giant Activision Blizzard has been given a significant boost as Britain’s antitrust regulator expressed confidence that the deal could be cleared. The acquisition, which was announced by Microsoft early last year, was initially blocked in April by Britain’s competition regulator due to concerns about the US tech giant’s potential control over the emerging cloud gaming market. However, Activision’s recent agreement to sell its streaming rights to Ubisoft Entertainment has put the deal back on the table.
The Competition and Markets Authority (CMA) stated on Friday that Activision’s divestment to Ubisoft had “substantially addressed” their previous concerns. Although the CMA still had some limited concerns about the new deal, Microsoft presented remedies that the regulator believes will adequately address these issues. Microsoft’s President Brad Smith expressed optimism about the CMA’s positive development in the review process, stating that they had presented solutions that fully addressed the CMA’s remaining concerns regarding cloud game streaming.
The news of the preliminary approval was well received by both Microsoft and Activision. Microsoft’s shares inched up 0.3 per cent in US pre-market trading, while Activision saw a rise of 1.6 per cent. Ubisoft also experienced an increase, with their shares gaining 3.6 per cent in Paris. The European Union had already approved the deal in May after accepting Microsoft’s commitments to license Activision’s games to other platforms, which were the same remedies rejected by Britain.
The CMA’s decision to reopen the case and reconsider the deal was a departure from its usual approach. However, the regulator noted that Microsoft had made significant changes to the deal to address their concerns. CMA Chief Executive Sarah Cardell expressed her disappointment that Microsoft had not proposed these changes earlier in the investigation, emphasizing the costs, uncertainty, and delays incurred when a potential solution is not presented in a timely manner.
Sophie Lund-Yates, an equity analyst at Hargreaves Lansdown, noted that while the loss of the cloud gaming rights was not ideal for Microsoft, it was a necessary concession to ensure the deal’s approval. Lund-Yates believes that this latest development is likely the final hurdle the deal needs to overcome. The CMA acknowledged that there are still some “residual concerns” surrounding the Ubisoft deal, but Microsoft has offered remedies to ensure that the terms of the sale can be enforced by the regulator.
Overall, Microsoft’s revised plan to address the regulator’s concerns has breathed new life into its acquisition of Activision Blizzard. The CMA’s positive response and the progress made in resolving the antitrust issues have raised hopes that the deal will finally be approved before the October 18 deadline.
More detail via Dawn here… ( Image via Dawn )