- Largest gaming deal completed after UK approval
- The British Financial Markets Authority (CMA) blocked the takeover in April
- Microsoft agreed to sell streaming rights to gain approval
- CMA says it pays players to “stick around”.
LONDON (Reuters) – Xbox maker Microsoft completed a $69 billion deal to buy Activision Blizzard ( ATVI.O ) on Friday, increasing its weight in the video game market with best-selling titles such as “Call of Duty.” Mandatory” to better compete with industry leader Sony (6758.T).
The games industry’s biggest deal, originally unveiled in January 2022, cleared the last major hurdle – UK approval – today when Microsoft agreed to sell streaming rights to Activision games to address competition concerns.
The completion is a major achievement for the US technology company to attract more people to the Xbox console and its Game Pass subscription service. Microsoft’s gaming revenue has lagged Sony’s, whose PlayStation consoles outsold Xbox consoles.
“Today is a good day to play,” Microsoft Gaming CEO Phil Spencer said in a post on social media platform X, formerly known as Twitter. He will lead Activision’s operations, with video game publisher CEO Bobby Kotick remaining in his position until the end of 2023.
Spencer cited the purchase as Microsoft’s way into the more than $90 billion mobile gaming market.
Activision makes popular mobile games including “Candy Crush Saga” and “Call of Duty Mobile,” which were left out of the cloud streaming deal Microsoft signed with French company Ubisoft Entertainment ( UBIP.PA ) to get British approval.
“Microsoft has more than $3 billion in revenue from instant mobile,” said Michael Pachter, an analyst at Wedbush Securities.
“The big takeaway is that Microsoft has a vision to offer subscription games and they need more content to make available to customers. So this is a big step towards having enough content,” he said.
The deal still faces resistance from the US Federal Trade Commission, which failed in previous attempts to block the purchase. The FTC said Friday that it is focused on its appeal but will “evaluate” Microsoft’s deal with Ubisoft.
But analysts expect little to change. “The impact of the FTC challenge will be limited to additional exemptions going forward,” said DA Davidson analyst Gil Loria.
The biggest hurdle came from Britain’s Competition and Markets Authority, which blocked the deal in April over fears it could give the US tech giant a stranglehold on the emerging cloud gaming market.
The deal was the biggest test of the CMA’s global power against tech giants since Brexit.
The regulator said on Friday that the “holding” resulted in a better outcome for competition, consumers and economic growth amid criticism of the joint companies.
The CMA said Microsoft’s concession on live streaming was a “game changer”, adding that it was the only competition authority in the world to achieve this result.
He said in a statement: “The new deal will prevent Microsoft from monopolizing competition in cloud gaming as the market evolves, while maintaining competitive prices and services for cloud gaming customers in the UK.”
The Capital Markets Authority block angered merger groups when Microsoft said Britain was closed for business.
The UK government has provided limited support to the capital markets regulator. Finance Minister Jeremy Hunt said he did not want to undermine their independence, adding that regulators also needed to focus on encouraging investment.
CMA chief executive Sarah Cardell said the regulator had “sent a clear message to Microsoft that the deal will be blocked unless they fully address our concerns and we remain committed to doing so.”
He said the capital markets regulator said its decisions were “free from political influence” and “not influenced by company pressure”.
Ben Barringer, equity analyst at Quilter Cheviot, said the CMA will see this as a victory but must be careful not to over-regulate the technology sector.
He added: “There are concerns that the UK is a poor place to do business and the tech industry in particular will be watching his moves closely.”
The European Commission gave the green light in May when it accepted Microsoft’s commitment to license Activision games such as “Overwatch” and “World of Warcraft” for other platforms.
(Reporting by Paul Sandel, Yadarsa Shabong, Aditya Soni in London, Yuvraj Malik and Zaheer Kachwala in Bengaluru and Fu Yun Che in Brussels; Preparation by Muhammad Al-Yamani for Arabic Bulletin – Editing by Muhammad Al-Yamani) Editing by Varun Hong Kong, Kate Holton, Sonali Paul, Jane Merriman and Sherry Jacob Phillips
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