Microsoft on Friday moved a step closer to completing its $69 billion acquisition of video game maker Activision Blizzard. The deal became an example of how companies can navigate increasing regulatory scrutiny of the power of big tech companies.
Britain’s Competition and Markets Authority, the last remaining government agency that Microsoft needs to approve before completing the deal, said the companies had taken steps to “substantially address” any remaining antitrust concerns. Stated. Regulators initially tried to block the deal on the grounds that it would stifle competition, but Microsoft decided not to acquire parts of Activision’s business related to so-called cloud gaming, a small but promising new area for the industry. We agreed and changed our policy.
The deal, first announced in January 2022, has been under intense scrutiny by antitrust authorities around the world and has been put on hold as a test of whether regulators will approve the tech megamerger amid concerns over the power of the industry. It’s here. The partnership will transform the video game market by combining Microsoft’s Xbox business with Activision, the publisher of hit video games such as Call of Duty and World of Warcraft.
But Microsoft, with its history of messy antitrust disputes dating back to the 1990s, has been able to overcome stiff regulatory resistance on both sides of the Atlantic. In July, the company won a legal battle with the Federal Trade Commission, which tried to block the deal. The European Union is typically an aggressive regulator of American technology companies, but cleared May contract.
“Microsoft has been very strategic in their approach to how they run the whole process from start to finish,” said Ioannis Kokkoris, professor of competition law and economics at Queen Mary, University of London. Stated.
He said it was highly unusual for the UK CMA to reverse course and the CMA had been under intense pressure to approve the deal after hurdles in other jurisdictions had been cleared.
Tommaso Valetti, a professor of economics at Imperial College Business School and a former UK antitrust litigator, said: “Even if we survive to the end, if the UK accounts for less than 5% of global revenue, “We cannot realistically prevent the transaction.” European Commission.
On Friday, British regulators said Microsoft had addressed their concerns. The CMA initially blocked the deal, arguing that a merger between the maker of a best-selling console and the publisher of a hit game could stifle the development of the emerging field of cloud gaming technology. Although still a very small market, this technology allows people to stream games on their phones, tablets, and other devices, reducing the need for traditional consoles.
Microsoft has agreed to transfer cloud streaming licensing rights for all current and new Activision Blizzard games to rival game publisher Ubisoft Entertainment. The arrangement will last for 15 years and is expected to prevent Microsoft from releasing Activision games solely on its own streaming service.
“The CMA believes that the restructured transaction has made significant changes that substantially address the concerns it expressed about the original transaction earlier this year,” the agency said in a statement. statement on friday.
The regulator said it was “consulting” Microsoft’s proposed remedies until October 6 before making a final decision on whether to approve the deal.
“We are encouraged by this positive development in the CMA review process,” Microsoft President Brad Smith said in a statement. Activision Blizzard said in a statement: “We look forward to working with Microsoft to complete the regulatory review process.”
The companies said they intend to complete the transaction by October 18th.
Government scrutiny of the growing power of the tech industry shows no signs of abating. A trial began this month over claims by the U.S. Department of Justice and state groups that Google abused its power in the online search market. On Friday, EU regulators announced they would reimpose restrictions. $400 million fine against Intel for abusing its power in the semiconductor market. EU authorities are also investigating Apple, Google, Meta and Microsoft for other anti-competitive business practices.
Kokkolis said Microsoft’s combination of legal battles and business concessions provided a strategy for other tech companies to follow when making major acquisitions.
“This will definitely make Big Tech companies more willing to continue doing business, but they know they will have to give up more than they thought before this lawsuit,” he said. .
This week, Cisco agreed to buy cybersecurity company Splunk for $28 billion. Semiconductor giant Broadcom is also close to completing its $61 billion acquisition of software company VMware.