The Microsoft Activision Blizzard Deal: A Complete Timeline of Events
This article details the significant events surrounding Microsoft’s acquisition of Activision Blizzard, a monumental deal in the video game industry. From initial concerns to final regulatory hurdles, the journey was fraught with challenges and ultimately led to a complex and protracted process.
First Concerns Raised by U.S. Senators
In April 2022, four U.S. senators – Sanders, Warren, Booker, and Whitehouse – expressed concerns about the potential anti-competitive impact of the acquisition. They highlighted the deal’s possible negative impact on Activision Blizzard employees, citing past allegations of misconduct and emphasizing the need for the Federal Trade Commission (FTC) to thoroughly examine the situation. The senators’ letter stressed the need to assess whether the company’s past actions were a result of monopsony power or anti-competitive behavior and whether the merger would exacerbate these problems.
Wall Street Questions Viability Despite Shareholder Approval
Despite shareholder approval for the $68.7 billion acquisition in April 2022, Wall Street remained cautious. Fluctuations in Activision Blizzard stock prices, which dipped toward the end of the year, indicated lingering investor skepticism about the deal’s final success. The apparent lack of confidence was potentially due to a lowering of the share price, from a high point above $95 to around $75.
UK’s Competitions and Markets Authority Launches Investigation
On July 6, 2022, the UK’s Competitions and Markets Authority (CMA) launched an investigation into the deal. Their investigation aimed to assess the potential negative impact on consumers and competition, scrutinizing potential issues like increased prices, decreased product quality, and restricted choice within the market. The CMA wanted to ensure a fair competitive market, and this caused much anxiety surrounding the acquisition.
Call of Duty Becomes the Centre of Debates
The deal quickly became entangled in the debate surrounding Call of Duty’s exclusivity. Microsoft initially proposed keeping the game on PlayStation, but discussions between Microsoft and Sony quickly became heated, and claims were exchanged between the two tech giants. Issues regarding exclusivity of the hugely successful game quickly became a focal point and an obstacle. Sony ultimately rejected Microsoft’s proposal.
CMA Raises More Concerns as Xbox and PlayStation Squabble
In October 2022, the CMA highlighted further concerns about the acquisition, particularly in the gaming console, subscription services, and cloud gaming market. Public disagreements between Xbox and PlayStation escalated, with claims from both sides about the potential negative impact of the merger on the gaming industry, and the impact this would have on consumers.
The Federal Trade Commission Enters the Fray
The FTC filed a lawsuit to block the acquisition in early 2023, arguing that the deal would harm competition in gaming console and subscription services, given Microsoft’s past history of making acquired games exclusive. This brought the deal to a near halt, creating a major battle for Microsoft to overcome.
European Union Issues Antitrust Warning
The European Union added to the regulatory pressure on Microsoft and Activision Blizzard, issuing a formal antitrust warning in February 2023. The EU’s statement raised concerns about exclusivity and potential harm to consumers and competition in the cloud gaming industry. The EU’s scrutiny of the deal fueled concerns across the industry.
CMA’s Provisional Report Says Deal Could Harm Gamers
The CMA issued a provisional report in February 2023, suggesting the deal might detrimentally affect gamers. This report focused on the deal’s potential to negatively alter the future of gaming, specifically regarding cloud gaming market competition. The report detailed potential scenarios, and gave the companies involved time to respond.
CMA Blocks Microsoft’s Acquisition of Activision Blizzard
On April 26, 2023, the CMA blocked the deal, citing concerns about the potential for reduced competition and innovation in the cloud gaming market. This decision served as a major setback for Microsoft and caused significant apprehension throughout the gaming industry. The CMA argued that Microsoft’s approach could diminish innovation and choice in the cloud gaming sector.
European Commission Approves Deal
In contrast to the CMA’s decision, the European Commission approved the deal in May 2023. The EC’s approval was contingent on Microsoft addressing concerns about cloud gaming exclusivity. The European Commission’s decision was ultimately in favor of the deal, and Microsoft made changes to satisfy the concerns of the EC.
Microsoft versus the Federal Trade Commission
A legal battle ensued with the FTC, culminating in a court ruling in favor of Microsoft in July 2023. The judge cited commitments by Microsoft regarding Call of Duty and other Activision Blizzard franchises’ availability on rival platforms. This was a major victory for Microsoft, and an important step forward for the deal.
Looking to Overcome the CMA
Following the FTC’s ruling, Microsoft intensified efforts to overcome the CMA’s block. This involved renegotiation, making concessions to ensure it would meet the demands of the CMA to ensure competition for gamers. It eventually submitted a revised proposal with new commitments designed to appease the UK regulator, which was pivotal to gaining approval.
Crossing the Final Regulatory Hurdle
On October 13, 2023, the CMA ultimately approved the deal, clearing the final regulatory hurdle. This final approval was contingent upon specific concessions, including arrangements for Ubisoft to take over cloud streaming rights in some regions, and allowed the acquisition to be finalized. The deal’s completion marks a significant achievement in the gaming industry.
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