12 July 2023

Activision's deal with Microsoft gets green light from US judge

Microsoft's potential acquisition of leading games publisher Activision Blizzard has received a boost as a US judge has rejected a request by US regulators to halt the deal. Shortly after the ruling, the UK's Competition and Markets Authority (CMA), which had previously announced it would block the deal, said it was prepared to discuss Microsoft's proposals to meet its concerns.

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In January 2022, Microsoft entered into an agreement to acquire Activision, one of the world's most popular video game publishers, in a deal worth $68.7 billion. The deal is the largest video game acquisition in history and the largest acquisition Microsoft has ever made.

US regulators argued that the proposed deal could harm gamers and lead to a reduction in competition because Microsoft, the maker of Xbox, would have the ability to restrict access to Activision's games for its competitors. The Federal Trade Commission (FTC) has urged a halt to the deal, which is due to be completed later this month, while challenging the plans. Judge Jacqueline Scott Corley ruled in favour of Microsoft, confirming in a 53-page decision document that the acquisition can be completed before the deal's final deadline of 18 July 2023.

At the same time, the European Union has already given its approval to the deal and the CMA is primarily concerned about two things: cloud gaming and gaming exclusivity. It believes that Microsoft can gain a commercial advantage by making Activision's games available exclusively on its cloud gaming service or on unfavourable terms on other services. If Microsoft acquires Activision Blizzard, it will strengthen its strong position in cloud gaming, which the regulator estimates represents 60-70 % of global cloud gaming services. The deal could also harm UK gamers as it would weaken the important rivalry between Xbox and PlayStation gaming consoles. Microsoft said it is negotiating changes to the deal to meet objections from the UK regulator, which could allow it to complete the transaction as early as this month.

"As a result of industry consolidation, we have seen an increasing number of interventions by antitrust authorities in recent years to prevent global giants from gaining market dominance."

-Jan Brabec, Partner – Financial Advisory