Saturday, September 30, 2023

Activision Blizzard purchase could require new UK investigation

After the legal victory over the US FTC, Microsoft Works full steam ahead for UK approval to buy Activision Blizzard. Yesterday, he took the first step by announcing a truce with the British Competition and Markets Authority (CMA) to negotiate a possible solution to the dispute between them. However, new complications could appear on the horizon.

The CMA has made it clear that, despite the goodwill gesture with Microsoft, for now it maintains its position on the purchase of Activision Blizzard. In addition, he stressed that since the final report has already been issued, the Americans cannot present new concessions to unlock the blockade. What they can do is offer a restructured dealalthough this would force a return to zero and start a new investigation.

Subjecting the purchase of Activision Blizzard to yet another investigative process is surely not to Microsoft’s liking. The Redmonds are playing their chips to close the deal before the July 18 deadline, and they know that a new regulatory investigation could take months. And time is money.

While both companies are heavily involved in getting the deal approved, there are nuances that should not be overlooked. For example, that if the agreement expires next week and an extension is not reached, Microsoft will have to pay Activision Blizzard $3 billion to be released from its obligations. Something that, certainly, is not going to happen, knowing everything that has elapsed from January 2022 to date.

Having said all this, yesterday’s rapprochement between the CMA and Microsoft has surprised more than one. Sources of Reuters claim that, after the FTC misstep, British regulator wants to get out of an “awkward position”. After all, the United Kingdom has been left as the only major jurisdiction trying to block the agreement, contrary to the European Union and the United States.

Microsoft moves its chips so that the CMA approves the purchase of Activision Blizzard

It is still unknown what Microsoft will offer the CMA to change its position and approve the purchase of Activision Blizzard. According to CNBCthose of Redmond have offered a “small divestment” linked to cloud gaming. And although no further details are mentioned, the proposal would make sense. In particular, if we consider that the main question of the British was about the business of cloud gaming.

It is also a reality that, having the approval of Europe and having overcome the obstacles of the United States, a large-scale UK-only restructuring does not appear to be a viable strategy. Especially if the possible changes end up generating new regulatory concerns in territories where the agreement is already approved.

Brad Smith, president of Microsoft, assured that they are analyzing “how the transaction could be modified” to adjust it to the concerns of the CMA. It will be necessary to see in what decant this proposal. Although a drastic exit is not ruled out either: completing the agreement without British approval and shutting down Activision Blizzard’s UK offices, studios and logistics operations. It would hit the economy and the job market hard, but it wouldn’t affect the distribution of their games there.

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