Microsoft’s massive $68.7 billion acquisition of video game giant Activision Blizzard has cleared its final regulatory hurdle after the UK’s Competition and Markets Authority (CMA) accepted concessions to address monopoly concerns.
The CMA was the lone holdout blocking the deal as regulators worldwide approved it with conditions. To appease the UK regulator, Microsoft agreed to sell Activision’s cloud streaming rights to French gaming firm Ubisoft for 10 years in markets outside Europe.
With the cloud gaming concession, the CMA believes competition in the nascent market will be preserved and approve the acquisition. The decision ends a nearly two-year regulatory saga allowing the deal to finally close.
Microsoft announced plans to acquire Activision in January 2022 to boost its gaming division. The deal would make Microsoft the third-largest gaming firm by revenue, controlling massive franchises like Call of Duty and World of Warcraft.
But regulators globally worried Microsoft would stifle competition if it controlled both blockbuster gaming IP and dominant cloud infrastructure. The UK’s CMA argued Activision could make Microsoft’s Azure-powered cloud service a must-have for gamers.
To ease concerns, Microsoft agreed to 10-year deals keeping Activision games available on PlayStation, Nintendo, and Steam. But protecting cloud competition required deeper concessions like selling streaming rights to a rival.
After the cloud deal, the CMA did a complete reversal, calling its intervention a “game-changer” promoting competition. But the CMA also admonished Microsoft’s tactics for needlessly dragging out the process.
Looking forward, Microsoft secures legendary franchises to anchor its gaming ambitions. Keeping titles multiplatform for a decade reduces near-term disruption to Sony.
Longer-term, Microsoft could still leverage key IP to promote its ecosystems once agreements expire. But concessions did help accelerate the closure of a process that lasted nearly two years since the announcement.
For now, Microsoft’s gaming focus likely shifts to properly integrating Activision’s 10,000 employees while keeping top talent. Microsoft also gains a tarnished asset in Activision, which faces ongoing workplace misconduct scandals.
Successfully turning around company culture while revitalizing franchises like Call of Duty will prove challenging but monumentally beneficial if achieved. In a rapidly evolving gaming landscape, Microsoft’s record investment must now swiftly translate into execution or risk delivering underwhelming returns.
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