Microsoft on the Verge of Acquiring 'Call of Duty' Maker, Activision

Microsoft's ambitious $69-billion acquisition bid for Activision Blizzard, renowned for its popular game "Call of Duty," has received approval from British regulators. This significant development paves the way for Microsoft to complete one of the most substantial technology acquisitions in history.

A Pivotal Deal in the Gaming Industry

Microsoft initiated this blockbuster takeover in January, positioning itself to become the third-largest gaming company globally in terms of revenue. However, the deal faced rigorous scrutiny from both US regulators and the UK's Competition and Markets Authority (CMA).

UK Regulator's Initial Objection

The CMA initially blocked the acquisition in April, citing concerns about potential competition issues in the burgeoning cloud gaming sector. The primary concern was that the deal might stifle competition, limiting players to using specific consoles for gaming.

Microsoft's Response and CMA's Change of Heart

In response, Microsoft submitted a modified proposal, which the CMA now acknowledges as having addressed key concerns. The CMA's statement on Friday signaled a shift in their stance, stating that the new proposal "opens the door to the deal being cleared." Consultations on the proposed "remedies" are underway, with a final decision pending.

Praise from Microsoft and Activision Blizzard

Both Microsoft and Activision Blizzard expressed their satisfaction with the CMA's change of heart. Microsoft's vice chairman and president, Brad Smith, regarded the announcement as a "positive development" and aims to secure approval for the deal's closure by October 18.

Activision Blizzard CEO Bobby Kotick also lauded the UK regulator's announcement as "a significant milestone for the merger."

The Path to a New Gaming Powerhouse

With the acquisition likely to proceed, Microsoft is poised to join the ranks of the gaming industry's top players. This new entity would solidify its position as a significant force in the sector, following only China's Tencent and Japan's Sony in terms of industry dominance.

Microsoft's Strong Presence in Cloud Gaming

Microsoft already holds a dominant position in cloud gaming, boasting 25 million subscribers for its Game Pass service. This, coupled with its Xbox console and a portfolio of games that includes "Minecraft," "Elder Scrolls," and "Fallout," establishes Microsoft as a key player in the gaming world.

Key Modification in the Deal

To address competition concerns, Microsoft has agreed not to take control of the cloud segment of Activision's business. Instead, this segment will be transferred to French studio Ubisoft for a duration of 15 years.

A Learning Opportunity for Microsoft

CMA's CEO, Sarah Cardell, noted that Microsoft's proposal could have been introduced earlier in the initial investigation, emphasizing the importance of timely and effective remedies.

Broader Regulatory Landscape

Beyond concerns about cloud gaming, regulators also expressed apprehensions about Microsoft potentially making Activision's games exclusive to its Xbox. However, in July, Microsoft and Sony reached an agreement to continue releasing "Call of Duty" on PlayStation.

International Approval and Antitrust Developments

While the European Union greenlit the acquisition in May, the US antitrust regulator temporarily paused its efforts to block the buyout following a court setback.

Industry Insights

Analysts emphasize that the fundamental elements of the deal remain intact, making it a significant win for Microsoft. The deal's smaller cloud component still holds substantial value for the tech giant.

Mutual Satisfaction

Both Microsoft and Activision Blizzard are likely to perceive this outcome as a successful negotiation where all parties achieved their desired results.

Some relevant and latest facts Microsoft's $69 billion takeover of Activision Blizzard:

• Microsoft announced the takeover of Activision Blizzard in January 2022.

• The deal would make Microsoft the world's third-largest gaming company by revenue, behind only Tencent and Sony.

• The deal has faced scrutiny from regulators around the world, particularly over concerns that it would give Microsoft too much power in the cloud gaming market.

• In April 2023, the UK's Competition and Markets Authority (CMA) blocked the deal, saying that it would "damage competition" in the cloud gaming sector.

• Microsoft subsequently submitted a new bid, which included the agreement to divest Activision Blizzard's cloud gaming business to French studio Ubisoft for 15 years.

• The CMA said that this concession was enough to address its concerns, and that it would now consult on the "remedies" before making a final decision.

• Both Microsoft and Activision Blizzard have praised the CMA's change of heart.

• Analysts said that the takeover now looked like a shoo-in, and that all sides were able to claim victory.

• If the deal goes through, Microsoft will be in a very strong position to compete in the growing cloud gaming market.

In addition to these facts, here are some other relevant and latest developments in the cloud gaming market:

• The cloud gaming market is expected to grow rapidly in the coming years, with revenues projected to reach $50 billion by 2027.

• Microsoft is currently the leader in the cloud gaming market, with its Game Pass service having over 25 million subscribers.

• Sony is also a major player in the cloud gaming market, with its PlayStation Plus service having over 47 million subscribers.

• Other major players in the cloud gaming market include Amazon, Google, and Nvidia.

• The cloud gaming market is becoming increasingly competitive, with companies investing heavily in new technologies and content.

The acquisition of Activision Blizzard by Microsoft is a significant development in the cloud gaming market. It gives Microsoft a significant advantage over its competitors, and it is likely to intensify competition in the market in the coming years.