Microsoft has finalized its record-breaking $69 billion (£56 billion) acquisition of Call of Duty developer Activision Blizzard. UK regulators have given Microsoft, owner of the Xbox gaming console, the go-ahead for the global merger.
After initially blocking the bid, the Competition and Markets Authority later declared that its concerns had been addressed. Phil Spencer of Microsoft called the acquisition of Activision “incredible.”
Activision Blizzard CEO Bobby Kotick revealed in a message to employees that he would be stepping down at the end of 2023 following the merger announcement.
“I have long said that I am fully committed to helping with the transition,” added the politician. “[Phil Spencer and I] both look forward to working together on a smooth integration for our teams and players.”
Mr. Spencer, CEO of Microsoft Gaming, tried to reassure customers despite worries about competition in the gaming sector voiced by Sony, the developer of the PlayStation, and government regulators.
Mr. Spencer stated in a statement after the takeover, “Whether you play on Xbox, PlayStation, Nintendo, PC, or mobile, you are welcome here – and will remain welcome even if Xbox isn’t where you play your favorite franchise.”
Because we all benefit from participation, we’re confident that today’s announcement will pave the way for countless new game possibilities.
“Keep costs stable.”
In the new agreement, Microsoft has given French video game developer Ubisoft the rights to distribute Activision’s titles on consoles and PCs via the cloud.
Despite the compromise, Microsoft will now monopolize massively profitable games like Call of Duty, World of Warcraft, and Candy Crush.
In a statement, the CMA said the new agreement would “preserve competitive prices” in the gambling business while delivering greater variety and higher quality services.
The takeover was approved, but Microsoft was criticized for its behavior during the nearly two-year legal struggle.
The CMA’s chief executive, Sarah Cardell, stated that Microsoft’s methods are unacceptable when interacting with the agency.
“During our initial examination, Microsoft had an opportunity to reorganize, but instead, they insisted on a package of actions that we informed them wouldn’t work. This kind of protracted litigation is a waste of resources on all fronts.
Microsoft’s president, Brad Smith, blasted the Competition and Markets Authority (CMA) after it vetoed the takeover earlier this year, calling the CMA’s decision “bad for Britain” and at odds with “the ambitions of the UK to become an attractive country to build technology businesses.”
It has been met with controversy and a range of reactions from regulators around the world, but European Union authorities have approved it. The US antitrust regulator had a recent court attempt to halt the deal thrown out.
Ms. Cardell, from the CMA, said, “We’ve made sure Microsoft can’t have a stranglehold over this important and rapidly developing market” after Activision sold Ubisoft, the developer of Assassin’s Creed, the rights to its cloud streaming service.
“We were clear that that deal couldn’t go ahead because it would have harmed competition, and that would have been bad for UK gamers,” according to her.
“We take our decisions free from political influence, and we won’t be swayed by corporate lobbying.”
‘We got over the last hump,’
Mr. Smith expressed Microsoft’s appreciation for the “thorough review and decision” of the CMA.
Activision’s outgoing CEO, Mr. Kotick, stands to make $400 million, while Activision’s chairman, Brian Kelly, stands to make $100 million, thanks to Microsoft’s all-cash company purchase at a premium price of $95 per share.
Microsoft has agreed to transfer to Ubisoft, for a period of 15 years outside the European Economic Area (EEA), the rights to stream Activision games from the cloud. The European Union, Iceland, Liechtenstein, and Norway are all included.
Ubisoft’s cloud gaming rights for Activision’s content will expire at the end of the 15 years. Still, it is believed that the regulator will have established competitors by then, making the cloud gaming industry more competitive.
Microsoft expects the acquisition to increase demand for the Xbox console and allow the company to expand the number of games available through the Xbox Game Pass subscription service, which allows users to play a library of games via cloud-based download or streaming for a monthly charge.
Microsoft will acquire Activision’s mobile-focused studio as part of the agreement, with the company’s sights set on building on the success of games like Candy Crush.
The acquisition solidifies Microsoft’s position as a gaming powerhouse and may propel it past Nintendo to become the third-largest participant in the industry, after PlayStation system owner Sony and market leader Tencent.
Concerned that major Activision titles like Call of Duty could become Xbox exclusives in the future, Sony fought hard against this pact.
Sony’s PlayStation is more popular than Microsoft’s Xbox, but both companies need quality content to thrive; Sony isn’t above buying up successful studios if necessary.
The merger’s approval was “great news for gamers,” according to Nicky Stewart, a consultant and the former commercial director of cloud services provider UK Cloud.
“[It will lead to] more choice, more innovation, better value, and improved gaming experiences and a healthy, competitive market,” said Ms. Stewart, a former head of ICT at the Cabinet Office government agency.
In the UK, the CMA has succeeded in getting Microsoft to agree to terms that other governments have not. The gaming industry in the UK will benefit from this.