Microsoft’s President, Brad Smith, has praised the UK’s Competition and Markets Authority (CMA) for its fair approach to the Activision Blizzard deal. This comes after Smith previously criticized the CMA for blocking Microsoft Corp.’s MSFT acquisition of Activision Blizzard in a $69 billion deal.
However, after the deal was restructured and given the green light in the UK, Smith has changed his stance and commended the CMA for its stringent and balanced approach. In an interview with BBC’s Radio 4 Today, Smith referred to the initial obstruction of the deal as Microsoft’s “darkest day” in the UK and suggested that the European Union provided a more conducive environment for business.
The firm stance of the CMA forced Microsoft to amend its Activision Blizzard deal, leading to the relinquishment of significant cloud gaming rights in the UK and other global markets. Smith acknowledged that the CMA’s strict standards compelled Microsoft to modify its initial acquisition plan significantly.
After months of global regulatory scrutiny, the transaction was finally sealed in October. However, the US Federal Trade Commission (FTC) is still pursuing its case against Microsoft’s deal in the US.
The CMA’s decision to initially block the deal in April 2023 was based on concerns that Microsoft could gain an unfair advantage in the cloud gaming industry. The regulator believed that Microsoft could make Activision’s games exclusive to its own cloud gaming service, which would be commercially beneficial for the company.
However, the deal was eventually approved in October 2023 after Microsoft agreed to concessions to alleviate competition concerns. The company secured approval after agreeing to sell Activision’s game streaming rights, including the popular “Call of Duty”, to Ubisoft Entertainment.
This case highlights the importance of regulatory scrutiny in ensuring fair competition in the market. The CMA’s firm stance and insistence on deal revision ultimately led to a more balanced outcome. It demonstrates the need for regulators to carefully evaluate mergers and acquisitions to prevent companies from obtaining monopolistic power and to protect the interests of consumers.
The Microsoft-Activision Blizzard deal is a significant event in the gaming industry, and its approval in the UK marks a milestone for both companies involved. As the deal continues to face challenges from the FTC in the US, the outcome of this case will have far-reaching implications for the gaming industry and the future of mergers and acquisitions in the technology sector.
Overall, the CMA’s role in this deal showcases the importance of regulatory bodies in ensuring fair competition and protecting consumer interests. It also highlights the need for companies to be prepared to revise their plans and make concessions to address competition concerns. As technology continues to shape the business landscape, regulatory oversight will play a crucial role in maintaining a level playing field for all market participants.
