Microsoft has modified its $69 billion acquisition deal with Activision Blizzard to address concerns the European Union's regulatory authorities raised. Learn more about CMA's possible approval and other obstacles that Microsoft will face.
Microsoft Modifies Deal to Avoid EU Probe
Gains Favorable Results
Microsoft Corp. is nearing completion of its modified $69 billion acquisition of Activision Blizzard Inc., with regulatory roadblocks in the European Union nearly cleared. The UK's Competition and Markets Authority (CMA) raised concerns about the potential monopolistic effects of this merger on the emerging cloud gaming market, pushing Microsoft to renegotiate the arrangement.
Initially rejected by the CMA in April, the new proposal addressed concerns about fair competition in the cloud gaming sector. The authority expressed concern about the possibility of higher pricing, fewer options, and less innovation for UK gamers. As a result, Microsoft has agreed to sell Ubisoft cloud gaming rights outside of the European Economic Area for all future Activision Blizzard game releases for the next 15 years.
Bloomberg reports that the European Commission, based in Brussels, is unlikely to request a second investigation from the European Union because the modified terms allay previous worries. As a result, it is anticipated that a final decision on the deal will be rendered on October 13 and rule in Microsoft's favor. The tech behemoth would then have the go-ahead to purchase Activision Blizzard.
CMA Satisfied with the Revisions
The CMA acknowledged Microsoft's efforts to address any problems in a statement. While the restructured deal is materially different to the previous transaction and substantially addresses most concerns, the CMA has limited residual concerns that certain provisions in the sale of Activision's cloud streaming rights to Ubisoft could be circumvented, terminated, or not enforced. To address these concerns, Microsoft has offered remedies to ensure that the terms of the sale of Activision's rights to Ubisoft are enforceable by the CMA. The CMA has provisionally concluded that this additional protection should resolve those residual concerns.
CMA CEO Sarah Cardell felt satisfied of the new proposal, which she described as structurally different
from Microsoft's initial approach. However, she remarked that Microsoft should have offered the revised proposal sooner so that both parties save themselves a lot of time, trouble and uncertainty by offering viable solutions early on. Microsoft and the CMA itself opted not to comment on the most recent legislative changes.
FTC Not Yet Done
Although Microsoft has made gains in Europe, there are still obstacles in the US legal system. Regardless of when the purchase is completed, the Federal Trade Commission (FTC) has stated its intention to pursue an internal challenge to it. Victoria Graham, a representative for the FTC, highlighted their view that the transaction presents a threat to the market. She said that while the matter is on the commission's agenda, the federal appeals process is their priority.
Microsoft's strategic moves are likely to significantly impact the game industry as the acquisition approaches completion, possibly changing the field of interactive entertainment for years to come.
Sources:
UK Government Press Release about Microsoft/Activision Deal
Bloomberg Report About CMA-Microsoft Talks
