Microsoft has successfully concluded its $69 billion acquisition of Activision Blizzard, strengthening its presence in the video gaming market by adding best-selling titles like “Call of Duty” to better compete with the industry leader, Sony.
The deal, initially unveiled in January 2022, faced its final major obstacle, approval from British authorities, which it received after Microsoft agreed to sell streaming rights for Activision’s games to address competition concerns.
This achievement represents a significant victory for the US tech company as it aims to attract more users to its Xbox consoles and Game Pass subscription service. While Microsoft’s gaming revenue lags behind Sony’s, whose PlayStation consoles outsell Xbox, this acquisition is expected to bolster its position.
Microsoft Gaming CEO Phil Spencer expressed enthusiasm about the acquisition, highlighting it as a strategy for Microsoft to enter the lucrative $90+ billion mobile gaming market. Activision is known for popular mobile titles like “Candy Crush Saga” and “Call of Duty Mobile,” which were excluded from the cloud streaming agreement Microsoft made with France’s Ubisoft Entertainment to secure British approval.
According to Wedbush Securities analyst Michael Pachter, Microsoft now instantly generates more than $3 billion in mobile gaming revenue, and this move is a significant step towards providing ample content for its subscription-based gaming services.
While the deal still faces opposition from the US Federal Trade Commission (FTC), analysts believe that any FTC challenge is unlikely to have a substantial impact. The FTC previously attempted to block the acquisition and is currently focused on its appeal, with a potential assessment of Microsoft’s agreement with Ubisoft.
The most significant challenge came from the UK’s Competition and Markets Authority (CMA), which originally blocked the deal in April due to concerns about Microsoft’s potential dominance in the emerging cloud gaming market. The CMA’s stance marked the most significant test of its authority to regulate tech giants since the UK’s departure from the European Union.
The CMA’s unwavering position and Microsoft’s concession regarding streaming were pivotal in reaching a resolution. This adjustment, according to the CMA, prevents Microsoft from monopolizing the cloud gaming market, ensuring competitive prices and services for UK cloud gaming customers.
The CMA’s stance had been met with criticism and backlash, with Microsoft suggesting that Britain was unfriendly to business. The British government offered limited support to the CMA, emphasizing the importance of encouraging investment alongside independence for regulators.
CMA Chief Executive Sarah Cardell stressed the CMA’s independence and resistance to corporate lobbying. This outcome may be seen as a victory for the CMA, but it also underscores the balance regulators must maintain in not over-regulating the tech sector.
The European Commission had previously approved the deal in May after accepting Microsoft’s commitments to license Activision’s games for other platforms, such as “Overwatch” and “World of Warcraft.”