Microsoft’s Acquisition of Activision Set to Proceed Following UK Regulatory Approval

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After a nearly two-year endeavor, Microsoft’s acquisition of gaming giant Activision has received approval from the U.K.’s Competition and Markets Authority (CMA). The approval comes with a restructured proposal that addresses the CMA’s concerns about Microsoft’s potential dominance in the cloud gaming market. A key concession involves Ubisoft obtaining Activision’s cloud-streaming rights for all PC and console games outside the European Economic Area (EEA) for the next 15 years. Within the EEA, Ubisoft will hold a non-exclusive license, allowing both Microsoft and Ubisoft access to cloud-streaming rights for Activision games in Europe.

Key Points:

  • Microsoft’s acquisition of Activision, announced in January 2022 for $68.7 billion, would make Microsoft the third-largest gaming company globally by revenue.
  • The U.K.’s Competition and Markets Authority (CMA) initially raised concerns about the deal weakening competition and potentially creating a dominant force in the cloud gaming market.
  • In response, Microsoft offered to divest the cloud streaming rights for all current and future Activision games to Ubisoft, addressing the CMA’s concerns.
  • The CMA lauded the concessions made by Microsoft as a “gamechanger” that will promote competition in the industry.

Analysis: The approval of Microsoft’s acquisition of Activision by the U.K.’s CMA marks a significant milestone for the deal, which faced regulatory scrutiny for nearly two years. The restructured proposal, which includes concessions regarding cloud-streaming rights, addresses concerns about potential market dominance. This development is likely to have a substantial impact on the gaming industry, positioning Microsoft as a major player with control over significant franchises. It also highlights the complexities and regulatory challenges associated with large-scale acquisitions in the technology and entertainment sectors.

TC

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