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July 17, 2023
There have been yet more twists in the saga that is Microsoft’s $69 billion bid for games publisher Activision Blizzard.
Late last week the UK Competition and Markets Authority (CMA) extended the deadline for its review into the takeover by a further six weeks.
In a brief notification statement, the regulator said it received “a detailed and complex submission from Microsoft claiming that there are material changes in circumstance and special reasons” why the CMA should no longer oppose the deal.
The CMA didn’t go into detail, but a couple of developments last week could quite easily constitute material changes and special reasons.
Bloomberg on Thursday reported that Microsoft and Activision are considering selling the UK rights to offer Microsoft and Activision games on cloud gaming platforms.
If that rumour proves to be true, it could go a long way to appeasing the CMA. The primary justification for April’s decision to block the acquisition was that the combined entity would have the means and incentive to prevent rivals from offering popular Activision titles like Call of Duty (CoD) and Fortnight. That becomes less of a problem if these games become available from a third party.
On top of that, the head of Microsoft’s Xbox gaming division, Phil Spencer, tweeted on Sunday that Microsoft and rival Sony have reached a deal to ensure CoD remains available on the latter’s PlayStation console.
A separate report by Windows Central revealed that the agreement will be in place for the next 10 years, after which it will have to be renegotiated. It applies only to CoD and no other Activision-Blizzard titles.
While this agreement doesn’t directly address the CMA’s concerns about the structure of the cloud gaming market, it does ensure that Microsoft’s biggest rival in said market can continue to compete when it comes to offering blockbuster titles.
By extending the deadline, the CMA now has until 29 August to mull it over.
Meanwhile, across the pond, the US Federal Trade Commission (FTC) has been struggling lately with its own effort to block the transaction.
Similarly to the CMA, the FTC is opposed to the takeover due to its potential consequences for the cloud gaming and console markets. It is still investigating whether the merged entity would violate US antitrust law, but with Microsoft planning to complete the acquisition on 18 July, it is running short of time to reach a decision.
Therefore last month (PDF), the FTC petitioned the District Court for Northern California to temporarily prevent the deal from being closed so it could finish its review. However, the court denied (PDF) the request early last week.
Reuters reported last Wednesday that the FTC will appeal the decision. That might not be necessary now because the CMA, by extending its review, might have done the FTC a huge favour. The reason being is that Microsoft won’t legally be able to complete the transaction – in the UK at least – until the CMA has reached a decision, and therefore it might be forced to agree an extension with Activision.
That would give the FTC more time to finish off its own review. Who knows how many more twists and turns could be in the offing between now and then?
Nick is a freelancer who has covered the global telecoms industry for more than 15 years. Areas of expertise include operator strategies; M&As; and emerging technologies, among others. As a freelancer, Nick has contributed news and features for many well-known industry publications. Before that, he wrote daily news and regular features as deputy editor of Total Telecom. He has a first-class honours degree in journalism from the University of Westminster.
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