Xbox maker Microsoft on Friday completed its $69 billion (nearly Rs 5,75,620-crore) acquisition of Activision Blizzard, expanding its presence in the video games market with best-selling titles such as Call of Duty to better align with the industry Leader Sony competes.
The games industry’s biggest deal, first announced in January 2022, cleared the last big hurdle – UK approval – earlier in the day after Microsoft agreed to sell streaming rights to Activision games to ease competition concerns .
The completion is a major win for the US technology company, which aims to attract more people to its Xbox console and Game Pass subscription service. Microsoft’s gaming revenue lags behind that of Sony, which sells more PlayStation consoles than Xbox.
“Today is a great day to play games,” Microsoft gaming chief Phil Spencer said in a post on the Remain in office until the end of 2023.
Spencer touted the acquisition as a way for Microsoft to tap into the mobile gaming market, which is worth more than $90 billion (nearly Rs. 7,508 billion).
Activision – which makes popular mobile games including Candy Crush Saga and Call of Duty Mobile – was excluded from Microsoft’s cloud streaming deal with France’s Ubisoft Entertainment to secure UK rights approve.
“Microsoft’s mobile revenue immediately exceeded $3 billion (nearly Rs 25,000 crore),” Wedbush Securities analyst Michael Pachter said.
“The biggest benefit is that Microsoft has a vision that they’re going to offer games through subscriptions, and they need to provide more content for subscribers. So this is a big step toward having enough content,” he said.
regulatory hurdles
The deal still faces opposition from the U.S. Federal Trade Commission, which previously tried and failed to block the takeover. The Federal Trade Commission said on Friday it was focused on its appeal but would “evaluate” Microsoft’s agreement with Ubisoft.
But analysts believe the situation won’t change much. “The impact of the FTC challenge will be limited to incremental concessions going forward,” DA Davidson analyst Gil Luria said.
The main hurdle came from the UK Competition and Markets Authority, which initially blocked the deal in April over concerns it could give the US tech giant a stake in the emerging cloud gaming market.
The deal is the biggest test of the CMA’s global power against tech giants since Brexit.
Regulators said on Friday that “standing their ground” in the face of criticism from the merged companies has produced results that are good for competition, consumers and economic growth.
The CMA said Microsoft’s concessions on streaming were a “game changer”, adding that it was the only competition authority in the world to achieve this result.
“As the cloud gaming market takes off, the new agreement will prevent Microsoft from locking out competition in the cloud gaming space, thereby retaining competitive prices and services for UK cloud gaming customers,” the company said in a statement.
The CMA’s blocking sparked outrage among the merger parties, with Microsoft saying it had ceased business in the UK.
The UK government has provided only limited support to the CMA, with Finance Secretary Jeremy Hunt saying that while he did not want to undermine its independence, the regulator also needed to focus on encouraging investment.
CMA chief executive Sarah Cardell said the regulator had “sent a clear message to Microsoft that the deal will be blocked unless Microsoft fully addresses our concerns, and we stand firm on that.”
She said the CMA’s decisions were “free from political influence” and would not be “influenced by corporate lobbying”.
Quilter Cheviot equity analyst Ben Barringer said the CMA would regard it as a victory but would need to be careful not to over-regulate the technology industry.
“There are concerns that the UK is an unsuitable place to do business, and the technology industry in particular will be watching its movements closely,” he said.
The European Commission in May approved Microsoft’s commitment to license Activision’s “Strike” and “World of Warcraft” games to other platforms.
© Thomson Reuters 2023
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