UK approves Microsoft's $69 billion deal with Activision Blizzard

After a lengthy regulatory review process, the largest transaction in gaming history has finally received full clearance. Last week, the final piece of the puzzle - the Competition and Markets Authority (CMA) in the UK - announced its approval of Microsoft's acquisition of Activision Blizzard, with both parties making "game-changing" amendments to the terms. The antitrust watchdog stated that Activision Blizzard's agreement to sell its streaming rights to Ubisoft Entertainment had an impact. This effectively means that its popular video games will no longer exclusively offer streaming services to Microsoft Xbox players after the acquisition is completed. In a statement, the CMA said, "This new deal will prevent Microsoft from blocking competition as the cloud gaming market rises, ensuring competitive prices and services for UK cloud gaming customers." According to Statista, the revenue of the cloud gaming market is expected to reach $4.34 billion (€4.1 billion) by 2023. By 2027, the annual growth rate is projected to reach 44.09%, with the market size reaching $18.71 billion (€17.7 billion). With approval granted, Microsoft now has the opportunity to complete this $69 billion (€65.4 billion) deal on October 18, following the original deadline. Competition and Markets Authority highly dissatisfied with Microsoft's strategy Activision Blizzard owns well-known game series such as "Call of Duty," "World of Warcraft," and "Candy Crush." Microsoft first announced the acquisition of this Fortune 500 video game publisher in early 2022. When the CMA blocked the deal in April this year, Microsoft stated that the UK had "stopped doing business," calling it the "darkest day" in its 40 years of operation in the country. The European Union approved the deal in May 2023, while US regulatory agencies made the same decision in July. Meanwhile, the protracted negotiations with UK regulators have become one of the most public and controversial antitrust proceedings in the country to date. Sarah Cardell, CEO of the Competition and Markets Authority, conveyed a clear message to Microsoft that the deal would be blocked unless concerns were fully addressed, and "we have always stuck to our principles" on this matter. She further stated that the CMA's decision was "not influenced by politics" and that the agency would not be "influenced by corporate lobbying." "Companies and their advisers should have no doubt that Microsoft's approach to engaging with the Competition and Markets Authority was not the right way," Cardell said in a statement, which can be described as less than friendly. Competition advisers say it's hard to imagine anything more serious In fact, the CMA's statement seems to lay the groundwork for a sign that publicly appealing against the agency in the media will be "severely criticized in the future." This was stated by Gareth Mills, a partner at Charles Russell Speechlys law firm, who advises on commercial dispute resolution, regulation, and competition matters. "In the UK context, it's hard to think of anything more serious. The comments made by the CEO of the Competition and Markets Authority during the approval process suggest that, although a cooperative solution was ultimately reached, some of Microsoft's strategies were still unsatisfactory," Mills told TNW. "In the end, this approval allows both parties to claim a satisfactory outcome. Microsoft completes the transaction, and the Competition and Markets Authority can reasonably point out that the solutions offered by Microsoft helped secure approval, which demonstrates evidence of its initial veto being the correct use of its power." Regarding Microsoft's comments on the approval, the tech giant took a more conciliatory tone compared to the Competition and Markets Authority. Brad Smith, Microsoft's Vice President and President, stated: "We have undergone a thorough review by the Competition and Markets Authority and appreciate the decision they have made today. With this acquisition, we have cleared the final regulatory hurdle, and we believe it will benefit players and the global gaming industry."