Microsoft purchase of Activision Blizzard provisionally approved by UK CMA
We're not quite there, but we're closer than we've ever been to Microsoft owning Activision Blizzard.
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What you need to know
- The UK's Competition and Markets Agency shared preliminary approval of Microsoft's plan to purchase Activision Blizzard.
- The decision came after Microsoft restructured its deal, with the largest change being the sale of cloud streaming rights of Activision Blizzard titles to Ubisoft.
- The Competition and Markets Agency will receive third-party feedback over the next few weeks and is expected to make a final decision before October 18, 2023.
Microsoft is one massive step closer to purchasing Activision Blizzard. Today, the UK's Competition and Markets Agency (CMA) provisionally approved Microsoft's $75 billion deal to buy Activision Blizzard. The decision follows Microsoft restructuring its deal to sell the cloud streaming rights of Activision Blizzard titles to Ubisoft. That change, along with other proposals, was enough to sway the CMA, at least provisionally.
"The sale of Activision’s cloud gaming rights to Ubisoft substantially addresses previous concerns and opens the door to the deal being cleared," said the CMA.
Today's decision is not approval of the deal. The CMA is, however, content with Microsoft's proposed changes. The agency will now have a consultation until October 6, 2023 to discuss the proposed remedies provided by Microsoft. A final decision is expected by October 18, 2023.
A post on gov.uk explains the decision. Here's the crux of why the CMA changed its mind following concessions and changes proposed by Microsoft:
"The CMA considers that the restructured deal makes important changes that substantially address the concerns it set out in relation to the original transaction earlier this year.
In particular, the sale of Activision’s cloud streaming rights to Ubisoft will prevent this important content – including games such as Call of Duty, Overwatch, and World of Warcraft – from coming under the control of Microsoft in relation to cloud gaming. The CMA originally found that Microsoft already has a strong position in cloud gaming services and could have used its control over Activision content to stifle competition and reinforce this position. The new deal instead results in the cloud streaming rights for Activision’s games being transferred to an independent player, Ubisoft, maintaining open competition as the market for cloud gaming develops over the coming years."
Microsoft President Brad Smith reacted to the news positively.
"We are encouraged by this positive development in the CMA’s review process," said Smith. "We presented solutions that we believe fully address the CMA’s remaining concerns related to cloud game streaming, and we will continue to work toward earning approval to close prior to the October 18 deadline."
Activision Blizzard CEO Bobby Kotick shared an email with employees that has also been posted online by Activision Blizzard.
"This is a significant milestone for the merger and a testament to our solutions-oriented work with regulators. I remain optimistic as we continue the journey toward completion and am very grateful to each of you for your dedication and focus throughout this process," said Kotick.
"As the regulators continue their process, I will keep you updated on our progress towards our expected closing."
Several key decision makers and figures at the CMA also shared quotes on Microsoft's restructured deal, both of which look promising for Microsoft.
"This is a new and substantially different deal, which keeps the cloud distribution of these important games in the hands of a strong independent supplier, Ubisoft, rather than under the control of Microsoft," said Colin Raftery, senior director of mergers and Phase 1 decision maker.
“With additional protections to make sure that the deal is properly implemented, this will maintain the structure of the market, enabling open competition to continue to shape the development of cloud gaming in the years to come, and giving UK gamers the opportunity to access Activision’s games in many different ways, including through cloud-based multigame subscription services.”
Sarah Cardell, the CEO of the CMA, also weighed in.
"The CMA’s position has been consistent throughout – this merger could only go ahead if competition, innovation, and choice in cloud gaming was preserved. In response to our original prohibition, Microsoft has now substantially restructured the deal, taking the necessary steps to address our original concerns."
While Cardell seems happy with the changes, the CEO said that it "would have been far better, though, if Microsoft had put forward this restructure during [the CMA's] original investigation."
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Sean Endicott brings nearly a decade of experience covering Microsoft and Windows news to Windows Central. He joined our team in 2017 as an app reviewer and now heads up our day-to-day news coverage. If you have a news tip or an app to review, hit him up at sean.endicott@futurenet.com.
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fjtorres5591 MS offered them a fig leaf to cover themseves with and they sound like they are taking the offer. Wise since they're out on a very thin limb.Reply
Given the contracts MS had already signed (they remain in force) and the scope of Ubisoft's rights, MS won't lose anything of signifiant value, especally if they reorganize Activision studios and move them to Zenimax or XBOX gaming studios so any new or resurected IP falls outside of UBISOFT's purview.
CMA may be able to claim they "protected" consumers but the price to the UK economy is going to outweigh the political gains. The UK has been trying to portray itself as a business friendly location to attract foreign investment but the CMA just put the lie to that claim: when even protectionist China. Japan, and Brazil signed off on the deal without qualms, any future business is going to have to think twice before coming within range of their overeach.
MS can shrug the odd bilion surcharge the delay is costing them but other players can't.
One thing the flood of documents leaked out of the FTC is that the prize MS most wants from the deal is King, not COD or the other big titlds. They're nice toget, especially the fallow IPs, but King added to their dozens of android apps make MS a top mobile player overnight. Fills a big hole in their portfolio and puts them way ahead of Sony in gaming scope.
All they have to do is port the King portfolio to XBOX (maybe via an android emulator?) as Play Anywhere games... -
NoLifeDGenerate Am I the only one tired of hearing about this deal for 3 years with zero benefit to the gamers? They should've told the CMA to fuck off and paid the fine already. Hell, they should've just made a deal for Activisions' stuff on gamepass and been done with it. I hate that they've wasted 3 years on buying a company when their games were already getting released on Xbox.Reply
Do something about Namco etc shitting on Xbox just because Japan doesn't buy them! I want EDF games back on Xbox. They had an exclusive one on 360, now they're literally being released on every console EXCEPT Xbox...in a time when it's never been easier to port and release games (similar architectures and discs not required). It's not that they're small devs refusing either. Even the EDF spinoff from Yukes skipped Xbox after Yukes has spent 20 years releasing multi-plats. Someone above them (D3/Namco) is flat out refusing Xbox ports. -
fjtorres5591
It's not that simple: as the Sony documents at the FTC trial revealed, Sony pays developers not to develop for XBOX. It's not exclusivity, just exclusionary. Also, in the japanese Keiretsu system groups of companies hold stock in each other. So it isn't a simple matter of selling x amount of games for y amount of yen, but of the bottom line in currency, stock value, and "intangibles".NoLifeDGenerate said:Am I the only one tired of hearing about this deal for 3 years with zero benefit to the gamers? They should've told the CMA to **** off and paid the fine already. Hell, they should've just made a deal for Activisions' stuff on gamepass and been done with it. I hate that they've wasted 3 years on buying a company when their games were already getting released on Xbox.
Do something about Namco etc shitting on Xbox just because Japan doesn't buy them! I want EDF games back on Xbox. They had an exclusive one on 360, now they're literally being released on every console EXCEPT Xbox...in a time when it's never been easier to port and release games (similar architectures and discs not required). It's not that they're small devs refusing either. Even the EDF spinoff from Yukes skipped Xbox after Yukes has spent 20 years releasing multi-plats. Someone above them (D3/Namco) is flat out refusing Xbox ports.
Likewise, japanese companies (and chinese, which are way worse) don't measure profits solely in net revenue. Market positioning and consumer lock-in matters a lot because they bring in more money over time if less early on *and* less to competitors who won't have as much to invest further on. (That is how Sony pushed Sega out of the console hardware business.Sony wasn't outselling DREAMCAST by that much but the cashflow wasn't enough to stay in the business.)
Nadella wasn't lying when he told the court that he would rather exclusives weren't necessary in the console business but they are. What he didn't say is that is the way NINTENDO set the market up when they came west. Sony is just playing by the rules NINTENDO set up, which work fine for them when they screw up (WiiU, first three batches of PS3); their loyal fanboys were so locked into their franchises that not even lack of backwards compatibility and halfbaked hardware can get them to switch. Too late for that. Again, going back to the trial documents: even if MS wanted to play by jspanese rules and take COD away from SONY the way SONY took SPIDER-MAN away from PC, XBOX, and Nintendo, it wouldn't significantly hurt their business long term.
The wonders of lock-in.
That is why Microsoft is "changing the subject" and hitting Sony where they can't go.
Last reference: in the recent XBOX leak one undereported fact came out. The FTC tried to mske something of the fact that despite SONY selling more PS5s than MS sells XBOXes, MS makes as much money than Sony in a given quarter. Why?
1- It costs almost as much to build a diskless PS5 as a disk model but they had to price it $100 less to stay within sight of the Series S, which was designed to make a profit at $200. (Watch the prices come Black Friday).
2- Securing those third party exclusives costs money. (EA wanted $300M to make JEDI SURVIVOR XBOX exclusive.)
3- Sony has pretty much given up on developing anything but their AAA franchise exclusives while MS is encouraging their developers to get creative with new, smaller IPs like PENTIMENT and HI FI RUSH. Less cost, much lower development cost. Better profit margins. (Unlike other subscription services paid for monthly, Game Pass has little if any churn. Sony, however, seems to hsve a lot, hence their pricing structure encouraging annual lock-ins for their service.)
SONY and Nintendo are enjoying the fruits of playing the long game for 30 years. But now MS is playing a longer one. And betting $69B on it.
Things are going to get fun.