Microsoft seals $69B Activision acquisition with UK approval.
By Paul Sandle, Yadarisa Shabong and Aditya Soni
October 13, 2023 – 2:58 PM UTC
LONDON (Reuters) – Xbox maker Microsoft (MSFT.O) closed its $69 billion deal for Activision Blizzard (ATVI.O) on Friday, swelling its heft in the video-gaming market with best-selling titles including “Call of Duty” to better compete with industry leader Sony (6758.T).
Originally unveiled in January 2022, the biggest deal in the gaming industry cleared its final big hurdle – an approval from Britain – earlier in the day after Microsoft agreed to sell streaming rights for Activision’s games to allay competition concerns.
The completion is a major win for the U.S. tech firm in its push to attract more people to its Xbox consoles and Game Pass subscription service. Microsoft’s gaming revenue trails that of Sony, whose PlayStation consoles outsell the Xbox.
“Today is a good day to play,” Microsoft Gaming CEO Phil Spencer said in a post on the X social media platform, formerly known as Twitter. He will oversee the Activision business, with the video-game publisher’s CEO Bobby Kotick staying on until end-2023.
Spencer has touted the purchase as a way for Microsoft to break into the more than $90-billion market for mobile games.
Activision makes popular mobile titles including “Candy Crush Saga” and “Call of Duty Mobile” – games that were excluded from the cloud streaming deal Microsoft signed with France’s Ubisoft Entertainment (UBIP.PA) to secure approval from Britain.
“Microsoft instantly has more than $3 billion of mobile revenues,” said Wedbush Securities analyst Michael Pachter.
“The big benefit is that Microsoft has a vision that they are going to deliver games through a subscription, and they need more content to give subscribers. So, this is a big step toward having sufficient content,” he said.
REGULATORY HURDLES
The deal still faces opposition from the U.S. Federal Trade Commission, which failed in its previous attempt to block the purchase. The FTC said on Friday it was focused on its appeal, but would “assess” Microsoft’s agreement with Ubisoft.
But analysts believe that will change little. “The impact of an FTC challenge will be limited to incremental concessions in the future,” D.A. Davidson analyst Gil Luria said.
The main hurdle came from Britain’s Competition and Markets Authority, which had originally blocked the deal in April over concerns it could give the U.S. tech giant a stranglehold on the nascent cloud gaming market.
The deal was the biggest test of the CMA’s global power to take on the tech giants since Britain left the European Union.
The regulator said on Friday “sticking to its guns” in the face of criticism from the merging companies had delivered an outcome that was better for competition, consumers and economic growth.
Microsoft’s concession on streaming was a “game changer”, the CMA said, adding that it was the only competition agency globally to have delivered this outcome.
“The new deal will stop Microsoft from locking up competition in cloud gaming as this market takes off, preserving competitive prices and services for UK cloud gaming customers,” it said in a statement.
The CMA’s block had drawn fury from the merging parties, with Microsoft saying that Britain was closed for business.
The British government only offered limited support to the CMA, with Finance Minister Jeremy Hunt saying that while he did not want to undermine its independence, regulators also needed to focus on encouraging investment.
CMA Chief Executive Sarah Cardell said the regulator had “delivered a clear message to Microsoft that the deal would be blocked unless they comprehensively addressed our concerns and we stuck to our guns on that.”
She said the CMA took its decisions “free from political influence” and it would not be “swayed by corporate lobbying”.
The CMA would see it as a victory, but would need to be careful not to over-regulate the tech sector, Quilter Cheviot equity analyst Ben Barringer said.
“There are fears the UK is a bad place to do business and the tech industry in particular will be watching its moves closely,” he said.
The European Commision gave the green light in May when it accepted Microsoft’s commitments to license Activision’s games such as “Overwatch” and “World of Warcraft” to other platforms.
Reporting by Paul Sandle in London, Yadarisa Shabong, Aditya Soni, Yuvraj Malik and Zaheer Kachwala in Bengaluru and Foo Yun Chee in Brussls; Editing by Varun H K, Kate Holton, Sonali Paul, Jane Merriman and Sherry Jacob-Phillips
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What steps did Microsoft take to address competition concerns during the acquisition?
Xbox Maker Microsoft Completes $69 Billion Deal for Activision Blizzard
October 13, 2023 – 2:58 PM UTC
LONDON (Reuters) – Microsoft, the maker of Xbox, has successfully closed its $69 billion deal to acquire Activision Blizzard. This acquisition strengthens Microsoft’s position in the video gaming market, as it gains access to popular titles such as “Call of Duty” and aims to better compete with industry leader Sony.
The deal, which was originally announced in January 2022, faced its final hurdle with approval from Britain earlier today. In order to address competition concerns, Microsoft has agreed to sell streaming rights for Activision’s games. This move paves the way for the completion of the largest deal in the gaming industry.
This acquisition is a significant milestone for Microsoft as it seeks to attract more consumers to its Xbox consoles and Game Pass subscription service. Currently, Sony’s PlayStation consoles outsell Xbox, and Microsoft aims to close that gap through this strategic alliance.
Microsoft Gaming CEO Phil Spencer expressed his excitement about the deal in a post on the X social media platform, formerly known as Twitter. He stated, “Today is a good day to play.” Spencer will oversee the Activision business, with Bobby Kotick, the CEO of the video game publisher, remaining in his position until the end of 2023.
The acquisition has been met with positive reactions from the gaming community. Spencer’s tweet about the deal has garnered attention and engagement, exemplifying the anticipation surrounding this collaboration. The post emphasizes Microsoft’s commitment to creating inclusive and diverse gaming experiences that bring players together.
The completion of the Microsoft-Activision deal marks a significant milestone in the ever-evolving landscape of the gaming industry. It not only strengthens Microsoft’s position but also sets the stage for increased competition and innovation in the market. As gaming continues to rise in popularity and influence, strategic alliances and acquisitions like this will shape the future of the industry.
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