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Microsoft Activision Blizzard
UK regulators have accepted Microsoft’s updated bid to acquire Activision Blizzard, maker of the Call of Duty video game.
The first $69 billion (£59 billion) bid was rejected by the Competition and Markets Authority in April, and the regulator said the transaction allayed its worries.
The largest takeover in the history of the gaming industry has finally received the go light after a battle that lasted over two years.
Nevertheless, the CMA criticized Microsoft’s actions despite accepting the acquisition.
Brad Smith, the president of Microsoft, criticized the CMA’s decision as being “bad for Britain” after the competition agency earlier this year banned the acquisition.
“Businesses and their advisors should be in no doubt that the tactics employed by Microsoft are no way to engage with the CMA,” CMA Chief Executive Sarah Cardell said.
Microsoft had the ability to restructure during our initial study but chose to steadfastly cling to a set of tactics that we informed them would be ineffective. Such a drag-out of the process is a waste of time and resources.
According to the revised agreement, Microsoft would give French video game developer Ubisoft the ability to distribute Activision’s titles on consoles and PCs via the cloud.
Microsoft will continue to have control over games like Call of Duty, World of Warcraft, and Candy Crush, which will generate enormous profits for the company despite the compromise.
According to the CMA, the new agreement will “preserve competitive prices” in the gaming business, offer more options and higher-quality services, and pave the way for the transaction to be finalized globally.
Regulators throughout the world have had mixed reactions to it and have found it to be contentious, but those in the European Union have already approved it. Recently, the courts rejected the US competition watchdog’s request to halt the transaction.
The Assassin’s Creed developer Ubisoft purchased Activision’s cloud streaming rights, and according to Ms. Cardell of the CMA, “we’ve ensured Microsoft can’t have a stranglehold over this important and rapidly developing market.”
“We take our decisions free from political influence and we won’t be swayed by corporate lobbying,” she stated.
“Final barrier cleared”
Microsoft was “grateful for the CMA’s thorough review and decision,” according to Mr. Smith.
A representative for Activision Blizzard called the deal’s approval “great news” and said that the “final regulatory hurdle” had been overcome for the tech giant to finalize the transaction.
According to their ownership of Activision shares, Microsoft is paying cash for Activision at a premium price of $95 per share, which means Bobby Kotick, the CEO of the company that makes World of Warcraft, will receive $400 million in compensation and Brian Kelly, the chairman, will receive $100 million.
Microsoft has agreed to give Ubisoft the license to stream Activision games from the cloud for 15 years outside of the European Economic Area (EEA) as part of the revised arrangement. Along with the EU nations, Iceland, Liechtenstein, and Norway are included in this.
Ubisoft will no longer own the cloud gaming rights for Activision’s content when the 15 years are up, but it is understood the regulator hopes the period will see rivals establish themselves and make the cloud gaming industry more competitive.
Microsoft is still optimistic that the acquisition will increase demand for its Xbox system and allow the tech company to add more games to its Xbox Game Pass service, where subscribers pay a fee to access a library of games from the cloud – either by downloading them or playing them online.
The partnership with Activision also means that Microsoft will be the sole owner of its mobile game development division, which it plans to use to build on the popularity of games like Candy Crush.
The takeover represents a significant shift for the games sector. It further establishes Microsoft as a behemoth in the video gaming business, giving it a chance to surpass Nintendo and overtake Sony, maker of the PlayStation console, and market leader Tencent as the third-largest player in the sector.
Concerned that popular Activision games like Call of Duty would eventually become Xbox exclusives, Sony vehemently opposed this agreement.
Microsoft’s Xbox now outsells the PlayStation in terms of sales, but like with any entertainment platforms, access to the best content is the secret to success.
Sony is also open to purchasing lucrative studios. Microsoft is aware that Activision Blizzard is in a league of its own, though.
The approval of the takeover, according to consultant and former commercial director of cloud services provider UK Cloud Nicky Stewart, is “great news for gamers.”
More choice, more innovation, greater pricing, superior gaming experiences, and a thriving, competitive market are all expected to result from it.
“Microsoft was compelled to make UK concessions by the CMA that were not required by other agencies. This is fantastic news for the developing gaming sector in the UK, according to Ms. Stewart, a former ICT director for the Cabinet Office government agency.
In 2023, Bethesda, a sizable studio that is owned by Microsoft, released Starfield after eight years of development and tremendous anticipation, but only for Xbox and PC.
The two corporations criticized the watchdog after the CMA turned down Microsoft’s initial bid to acquire Activision, claiming that the CMA’s decision had run counter to “the ambitions of the UK to become an attractive country to build technology businesses.”
According to Ms. Cardell of the CMA, who spoke to the BBC, “We were clear the it couldn’t go through because it would have hurt competition, and that would have been bad for UK gamers.
“We defended our position. Microsoft came forward with a significant concession, despite the fact that we were ready to defend that choice in court.