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Microsoft activision deal  aiming to spread gaming delight and foster a vibrant community accessible across all devices

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In Microsoft activision deal the early months of 2022, tech behemoth Microsoft made waves with its announcement to acquire Activision Blizzard, a gaming industry titan, for a staggering $68.7 billion (~£50.5 billion). This news sent shockwaves throughout the world and was swiftly recognized as one of the most impactful deals in gaming history.

Fast forward to late 2023, and the merger is still navigating through a maze of legal challenges, lawsuits, and government investigations from various corners of the globe. 

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As of September 2023, the merger appears to be on track for success, though the exact culmination date remains uncertain. The original merger deadline of July 18th was later extended to October 18th. Here’s a comprehensive update to keep you informed about the twists and turns in the Microsoft-Activision Blizzard deal.

Why are nations scrutinizing this merger?

Due to its massive scale, global regulators are concerned that this acquisition might stifle competition and grant Microsoft activision deal, already a major player with Xbox, excessive dominance in the gaming industry.

The primary apprehension revolves around potential impacts on the console gaming sector. Regulators argue that Microsoft could potentially make Activision Blizzard’s games, including the highly successful Call of Duty franchise, exclusive to its consoles, thus posing a threat to competitors like Sony and Nintendo. 

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There are also concerns about potential consequences in the expanding cloud gaming market. Despite both companies being based in the US, failure to secure approval in other countries could impede the newly merged entity’s ability to operate in those regions.

It’s important to note that this acquisition of Activision Blizzard isn’t Microsoft’s first significant investment in gaming; they already own Minecraft, 343 Industries (developer of Halo), Obsidian Entertainment, Playground Games (developer of Forza), and ZeniMax (owner of Bethesda). However, Activision Blizzard would represent Microsoft’s largest purchase in the gaming industry.

In which regions has the merger received approval?

The merger between Microsoft and Activision Blizzard has gained approval in various global markets. Notably, it has been approved in the European Union, Ukraine, Saudi Arabia, Brazil, Serbia, Chile, Japan, South Africa, South Korea, New Zealand, and China.

Serbia, Brazil, Saudi Arabia, and Chile were the initial countries to approve the merger in 2022. Subsequently, other nations have followed suit, granting approval during the spring of 2023 and onward.

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Which Countries Have Opposed the Merger?

Currently, the merger is under review in the United States. In December 2022, the Federal Trade Commission (FTC) initiated legal action to halt the merger. 

Then, on June 12th, 2023, the FTC filed another lawsuit, requesting a temporary restraining order to halt the merger during the ongoing broader lawsuit. This followed reports from the New York Times that Microsoft and Activision Blizzard were planning to proceed with the deal despite existing regulatory challenges.

On July 11, 2023, the District Court in the Northern District of California rejected the FTC’s request for a restraining order to prevent the merger from moving forward, after five days of testimony. 

The judge concluded that the FTC had not demonstrated a strong likelihood of success regarding its claim that the merger would significantly reduce competition. The FTC appealed this decision on July 13th, but the appeal was dismissed.

While the FTC’s attempt for a restraining order did not succeed, the December 2022 lawsuit remained active. However, in July, BNN Bloomberg reported a pause in the lawsuit, facilitating negotiations between the FTC and Microsoft.

On the other side in the UK, the Competition and Markets Authority (CMA) opposed the deal in April 2023. In an unexpected move, CMA cited adverse effects on the cloud gaming market as the main reason. Microsoft and Activision Blizzard challenged this decision. 

By August, CMA formally rejected the original deal but permitted Microsoft to propose a modified deal for assessment, which is presently under CMA’s review. As of September 2023, CMA signaled approval for the revised deal, paving the way for the merger to proceed.

Why Did Microsoft Opt for Acquiring Activision Blizzard?

In January 2022, the announcement of Microsoft’s acquisition of Activision Blizzard made waves, with Reuters titling it ‘Microsoft to gobble up Activision in a $69 billion metaverse bet.’ 

This historic deal, occurring during the peak of the metaverse trend, marked a significant move in the gaming industry. Microsoft’s interest in this acquisition lay in enhancing its position within the gaming sector, particularly in the burgeoning metaverse, and solidifying its leadership in cloud gaming.

By incorporating Activision’s renowned titles into its portfolio and leveraging the Xbox platform alongside Game Pass and Xbox Live, Microsoft significantly bolsters its position in the gaming arena, making it a formidable force. 

The acquisition grants Microsoft access to high-value, multi-million dollar intellectual properties (IPs) like Call of Duty, Overwatch, Diablo, and WarCraft franchises, along with reputable studios such as Treyarch and Infinity Ward. 

This move comes at a time when video game IPs are gaining immense value, exemplified by the success of HBO’s adaptation of The Last of Us.

In addition, the company is poised to hold a significant stake in the esports realm, gaining entry to prominent esports entities such as Call of Duty, Overwatch, and Major League Gaming.

When you factor in the internal challenges and controversies faced by Activision Blizzard, including the SEC investigation into CEO Bobby Kotick, the appeal of the deal for both parties becomes evident. 

Microsoft’s proposition materialized during a period of heightened legal scrutiny and public criticism regarding lawsuits alleging pervasive sexual harassment issues within the company. 

While $69 billion may not seem like a bargain, given their legal and public relations predicaments, Microsoft activision deal might have secured a more advantageous arrangement.

Unraveling the Deal: A Comprehensive Timeline

Microsoft’s ambitious venture faced an unexpected hurdle as its colossal acquisition rattled the gaming industry, attracting scrutiny from regulators, governments, competitors, and various agencies globally. 

Sony, a key adversary and a dominant force in the gaming console realm, was one of the earliest dissenting voices against the acquisition. They expressed concerns about the fate of Microsoft activision deal‘s newly acquired intellectual properties, fearing competition with PlayStation, a direct rival to Xbox.

The storm began brewing in early February when the United States Federal Trade Commission initiated an investigation into the deal. Given its magnitude, it became evident that this wouldn’t be a straightforward process for Microsoft, a sentiment validated repeatedly in the subsequent months. The FTC escalated matters by officially filing a lawsuit on December 8, 2022, intensifying the pressure on the already embattled deal.

Microsoft activision deal

The merger faced a significant setback in January 2023 when the UK’s regulatory authority, the CMA, provisionally opposed it. Despite initial expectations that the CMA might approve the merger due to a statement in March addressing one of its concerns, the government body ultimately blocked the proposed acquisition in April 2023. 

The primary reason cited was concerns about the future of the cloud gaming market. Microsoft activision deal did propose a solution, but it was deemed insufficient and rejected by the CMA. Consequently, both Microsoft and Activision Blizzard appealed the decision.

On July 11th, the focus shifted to the United States, where Microsoft and Activision Blizzard scored a crucial victory. A court denied the FTC’s request for a restraining order, which had been filed to halt the deal. This ruling meant that the two companies could proceed with the merger in the US if they chose to do so, though it would not affect their ability to operate in the UK.

On July 19th, Microsoft activision deal and Activision Blizzard revealed an extension of their initial July 18th deadline to October 18th, allowing more time for negotiations with the UK’s CMA.

By August 22, Activision Blizzard and Microsoft submitted a revised proposal to the CMA after confirmation of the original deal being blocked. Microsoft activision deal communicated that the new proposal significantly differed from the one presented earlier to the CMA in 2022, aligning with UK law. 

Microsoft informed the CMA about this altered transaction structure and anticipates the CMA’s review to conclude before the new merger deadline of October 18th, following a 90-day extension granted earlier.

Activision Blizzard games on PC & console 

A significant component of the recent agreement involved the transfer of streaming rights for Activision Blizzard games on PC and console to Ubisoft for a duration of 15 years. 

This arrangement paves the way for Ubisoft to provide Activision Blizzard’s games on cloud platforms not operating on Windows. The Competition and Markets Authority (CMA) has indicated it will evaluate this agreement as if it were an entirely novel proposition.

However, alterations in the fundamental terms of the deal could prompt the European Union (EU) to reevaluate its position. According to reports, an EU spokesperson mentioned, 

“The commission is carefully assessing whether the developments in the UK require another notification to the commission.” The EU had initially approved the deal in May, and if the new submission to the CMA significantly differs, they might need to reexamine it.

Nevertheless, as of September 22, 2023, the CMA has stated that Microsoft activision deal‘s recent deal “opens the door” for the merger to progress, indicating a positive trajectory towards a successful completion of the merger.

What Does Acquisition Mean for Esports?

This acquisition positions Microsoft as a significant player in esports during a challenging period for the industry. Microsoft activision deal‘s involvement could bring a sense of credibility as esports grapples with declining investor confidence and financial struggles across many companies.

Notably, Activision Blizzard’s Overwatch League and Call of Duty League are facing challenges. Activision Blizzard acknowledged in May 2023 that their leagues are experiencing difficulties impacting operations and possibly the longevity of the leagues under the existing business model. 

In July 2023, it was revealed that franchises would vote on the league’s future, with an offer of $6 million (~£4.66 million) for those looking to exit.

This development follows franchise owners initiating collective bargaining against the company in January 2023 due to high costs and unfulfilled revenue promises. Additionally, numerous sponsors withdrew support from the leagues following Activision Blizzard’s sexual harassment lawsuits.

Given these circumstances, substantial financial and influential support from Microsoft could potentially rejuvenate their prospects. On the flip side,Microsoft activision deal, as the potential new owner, may not be as deeply committed to Activision Blizzard’s extensive franchising initiatives and could base decisions on their current financial position. This could potentially lead to downsizing or even the cancellation of the leagues.

What’s on the horizon?

Recent regulatory pressure has pushed Microsoft to make concessions, notably ensuring access to Activision Blizzard’s games for competitors. The deal must be finalized by the October 18th deadline, unless an extension is granted by Microsoft and Activision Blizzard.

Following the Competition and Markets Authority’s (CMA) approval for the acquisition, Alex Haffner, a competition partner at London-based law firm Fladgate, commented, 

“If this stands as the final decision, both parties will publicly acknowledge achieving their intended goals.” Microsoft activision deal is striving to overcome the last significant obstacle in finalizing this vital agreement, while the CMA is pushing for substantial concessions to address competition and consumer anxieties.

Despite the resolution, once the investigations settle, important lessons will be learned, and scrutiny of how competition regulators handle “Big Tech” will persist.

Microsoft activision deal had already proposed a “new deal,” willing to sell critical rights for cloud gaming versions of Activision gaming titles to Ubisoft. The CMA’s recent announcement effectively endorses this concession as adequate to alleviate competition concerns, previously viewed as a barrier to regulatory clearance in the UK.

As per reports and disclosed documents during the acquisition efforts, Microsoft activision deal is deeply committed to Activision Blizzard, seeing it as a linchpin to fortify its position in the gaming industry, which is gaining increasing significance.

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