UK Regulator Approves Microsoft’s Activision Blizzard Purchase

The UK competition regulator has signed off on Microsoft’s bid in January 2022 to buy Activision Blizzard for $69 billion (£56bn).

The UK approval came after the Competition and Markets Authority (CMA) announced on Friday that Microsoft’s major concession to not include cloud gaming rights in the deal, had addressed its concerns, and thus the deal was approved.

The UK had been the last remaining regulatory obstacle for Microsoft’s ambition to close the acquisition. The UK approval came as no surprise, after the CMA indicated last month that the restructured Microsoft/Activision deal had addressed its previous concerns surrounding cloud gaming.

UK approval

Microsoft’s concession came when the tech giant pledged it would not acquire cloud rights for existing Activision PC and console games, or for new games released by Activision during the next 15 years.

Instead, these rights would be divested to Ubisoft Entertainment SA (Ubisoft) prior to Microsoft’s acquisition of Activision.

As a result of this concession, the CMA agreed to look afresh at the deal and launched a new investigation in August. That investigation was completed on Friday, with the CMA clearing this narrower transaction.

“The CMA is resolute in its determination to prevent mergers that harm competition and deliver bad outcomes for consumers and businesses,” said Sarah Cardell, chief executive of the CMA. “We take our decisions free from political influence and we won’t be swayed by corporate lobbying.”

“We delivered a clear message to Microsoft that the deal would be blocked unless they comprehensively addressed our concerns and stuck to our guns on that,” said Cardell.

“With the sale of Activision’s cloud streaming rights to Ubisoft, we’ve made sure Microsoft can’t have a stranglehold over this important and rapidly developing market,” said Cardell. “As cloud gaming grows, this intervention will ensure people get more competitive prices, better services and more choice. We are the only competition agency globally to have delivered this outcome.”

Microsoft rebuke

And Cardell took the opportunity to issue a rebuke to Microsoft over its response, when the CMA in April officially blocked the acquisition, citing potential harm to the nascent market for cloud gaming.

That April decision had prompted an angry war of words between Microsoft and the British regulator, after Microsoft President Brad Smith said the CMA move was “bad for Britain” and marked Microsoft’s “darkest day” in its four decades of working in the UK.”

“There’s a clear message here – the European Union is a more attractive place to start a business than the United Kingdom,” Smith was quoted as saying at the time.

Microsoft’s Smith even met with the UK’s Chancellor Jeremy Hunt in London for talks over the matter.

The CMA chief executive was also forced to defend the April veto on the deal before Parliament, after Brad Smith’s comments.

So it perhaps no surprise that Cardell on Friday directly called out Microsoft’s behaviour over the matter.

“But businesses and their advisors should be in no doubt that the tactics employed by Microsoft are no way to engage with the CMA,” Cardell said on Friday.

“Microsoft had the chance to restructure during our initial investigation but instead continued to insist on a package of measures that we told them simply wouldn’t work,” Cardell said. “Dragging out proceedings in this way only wastes time and money.”

Microsoft response

Microsoft’s Brad Smith struck a much more conciliatory tone when he responded the CMA announcement.

“We’re grateful for the CMA’s thorough review and decision today,” he tweeted. “We have now crossed the final regulatory hurdle to close this acquisition, which we believe will benefit players and the gaming industry worldwide.”