The Memo: Microsoft’s Activision Blizzard acquisition authorised by the CMA

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Microsoft’s Activision Blizzard acquisition authorised by the CMA

Alice Gregory – 23 October 2023

After almost two years of investigations and negotiations, the Competition and Markets Authority (CMA) has finally cleared Microsoft’s $68.7bn acquisition of Activision Blizzard, making it the biggest deal the gaming industry has seen so far. The CMA had initially blocked the deal, citing potential competition between Microsoft and Sony over the Call of Duty franchise in particular (which you can read all about here). However, in August of this year, a new version of the deal was proposed in which Activision’s cloud streaming rights would instead be sold to Ubisoft, the French video game publisher home to games such as Assassin’s Creed and Just Dance. This prompted the CMA to relaunch their investigation, eventually concluding that the re-worked deal would not harm competition in the market.

The Competition and Markets Authority was established as the UK government’s main competition regulator, formed to work with industry-specific regulatory bodies in order to strengthen business competition in the UK and crack down on anti-competitive activities. Lawyers in the space will help companies structure commercial agreements to ensure that they can withstand a competition challenge.

On top of the Activision acquisition, Microsoft had also signed a deal with Sony and Nintendo, agreeing that Call of Duty would stay on PlayStation if the deal were to succeed. Given that more than half of the UK’s sales for the most recent Call of Duty game – which brought in $1bn in the first weekend of its release – were for PlayStation, this certainly covers one of the major concerns of the deal. However, while Microsoft has already stated that other games will become exclusive, the CMA maintains that the company will not hold a monopoly over the market. That said, the regulator did criticise Microsoft for dragging out the process, explaining how time and money could have been saved if the company had agreed to restructure the deal sooner.

So, Microsoft will now own the rights to other major titles such as World of Warfare, Overwatch and even Candy Crush, all of which bring in billions from subscriptions and in-game sales. The hope for the company is that being able to add such names to its Xbox ‘Game Pass’ subscription service will increase demand for the console, which is still outsold by PlayStation. But it will cost a pretty penny at $95 a share, with Activision’s soon-to-step-down CEO and chairman earning $400m and $100m respectively from their shares.