British Approval Seals Microsoft’s $69 Billion Deal With Activision

(CTN News) – With best-selling titles like “Call of Duty,” Xbox maker Microsoft has boosted its heft in the video-gaming market to better compete with Sony.

Originally unveiled in January 2022, the biggest deal in gaming cleared its final big hurdle earlier today after Microsoft agreed to sell streaming rights for Activision’s games to ease competition concerns.

Xbox’s completion is a major win in its push to attract more people to its consoles and subscription service. Sony’s PlayStation consoles outsell Microsoft’s Xbox consoles in terms of gaming revenue.

Microsoft Gaming CEO Phil Spencer wrote on the X social media platform, formerly known as Twitter, that today is a good day to play. Activision’s CEO Bobby Kotick will remain on until the end of 2023 to oversee the company’s business.

Spencer has touted the purchase as a way for Microsoft to break into the more than $90 billion mobile game market.

Microsoft signed a cloud streaming deal with France’s Ubisoft Entertainment to secure Britain’s approval, but excluding popular mobile titles such as Candy Crush Saga and Call of Duty Mobile.

According to Wedbush Securities analyst Michael Pachter, Microsoft has instantly generated more than $3 billion in mobile revenues.

“This will be a big step towards having sufficient content since Microsoft plans to deliver games through a subscription model. So, this is a big step in that direction,” he said.

Hickups in the regulatory process

It still faces opposition from the US Federal Trade Commission, which unsuccessfully tried to block the deal in the past. Microsoft’s agreement with Ubisoft will also be assessed by the FTC, which said it was focusing on its appeal.

However, analysts do not expect that to change much. It is likely that an FTC challenge would result in incremental concessions in the future, according to Luria.

Britain’s Competition and Markets Authority initially blocked the deal in April, worried it would give the US tech giant a stranglehold on the nascent cloud gaming industry.

CMA’s global power to take on the tech giants was put to the test in this deal.

After “sticking to its guns” in the face of criticism, the regulator said the merger had improved competition, consumers, and the economy.

As the only competition agency globally to have achieved this outcome, the CMA said Microsoft’s concession on streaming was a “game changer”.

The new deal prevents Microsoft from stifling competition in cloud gaming, preserving competitive prices and services for UK cloud gaming customers, it said.

Several merging parties were furious at the CMA’s block, with Microsoft saying that Britain was no longer open for business.

Finance Minister Jeremy Hunt said he did not want to undermine the CMA’s independence, but regulators also needed to encourage investment in order to achieve their goals.

Sarah Cardell, chief executive of the CMA, said the regulator had sent a clear message to Microsoft that the deal would be blocked until our concerns were comprehensively addressed.

CMA decisions are free from political influence and corporate lobbying will not sway them.

Ben Barringer, equity analyst at Quilter Cheviot, said the CMA would see it as a victory, but they would have to be careful not to over-regulate the tech sector.

“The tech industry in particular will be watching the UK’s moves closely,” he said.

In May, the European Commission accepted Microsoft’s commitments to license Activision games, including “Overwatch” and “World of Warcraft,” to other platforms.

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