After a painstaking 20-month-long regulatory battle, Microsoft successfully completed its monumental acquisition of game publisher Activision Blizzard. The $68.7 billion deal marks Microsoft's most significant purchase to date, significantly outpacing previous deals such as the purchase of LinkedIn in 2016 for $26 billion and Bethesda in 2021 for $7.5 billion.
The acquisition process proved to be a colossal challenge that took considerable effort and intricate negotiation. Microsoft had to surpass significant regulatory hurdles, winning a US federal court case against the Federal Trade Commission, and structuring the deal satisfactorily to meet the Competition and Markets Authority rules in the UK.
The CMA had expressed satisfaction in August with a compromise offered by Microsoft. The tech giant agreed to divest the cloud streaming rights for Activision games to Ubisoft outside of the European Economic Area, quelling the CMA's earlier competition concerns.
In its statement, the CMA presented this green signal as a minor victory, stating that its intervention achieved the exclusion of Microsoft from monopolizing cloud gaming competition. The regulator sees this as a win for consumers, affirming the maintenance of fair pricing and quality of service in the industry.
Xbox Takes A Giant Leap In Gaming
The acquisition marks a strategic leap for Microsoft in the gaming industry, positioning it as the third-largest gaming company, following Tencent and Sony, in terms of revenue. Now bestowed with Activision Blizzard's franchises such as Call of Duty, World of Warcraft, and Diablo, Microsoft is set to enhance its gaming prowess significantly. Xbox chief Phil Spencer voiced his team's excitement at welcoming the Activision Blizzard crew, promising to bring the joy of gaming to more people while fostering a culture of inclusivity and productivity.
Microsoft has further plans to incorporate many of Activision Blizzard's games into the Xbox Game Pass. However, titles like Modern Warfare 3 and Diablo IV are not slated for inclusion in Game Pass this year.
CMA Rebuffs Microsoft's Tactics
CMA CEO, Sarah Cardell, criticized Microsoft's lobbying tactics and insisted they did not influence the regulator's decision. “We won't be swayed by corporate lobbying,” she said. Microsoft's offer to resolve the competition concerns was initially blocked by CMA in April. Consequently, Activision Blizzard vowed to work with Microsoft to contest the decision.
In response, Microsoft's vice-chair and president Brad Smith accused the regulator of having a flawed understanding of the market and relevant cloud technology. However, the CMA's statement admonished Microsoft's approach. Cardell warned that shoulder-rubbing of such a nature was inappropriate for business dealings with the CMA.
Microsoft Transforms Into Publishing Powerhouse
The acquisition sees Microsoft add nine game studios from the Blizzard division and studios in over 11 locations from the mobile-centric King section. With more than 8,500 Activision employees now part of Microsoft, the tech giant has morphed into a formidable publishing force.
Bobby Kotick, CEO of Activision Blizzard, will retain his role until the end of 2023, aiding the smooth transition process. He will report to Phil Spencer, leading the newly acquired team into the integration phase.