Investigation into Microsoft's proposed acquisition of Activision reopens in the UK

23 Aug, 2023

Investigation into Microsoft's proposed acquisition of Activision reopens in the UK

The UK has initiated a fresh inquiry into Microsoft Corp.'s $69 billion purchase of Activision Blizzard Inc. after the tech giant submitted a substantially revised proposal to the nation's antitrust agency, reawakening a deal that was previously thought to have been dormant.

In a unique move, the Competition and Markets Authority (CMA) announced that it was reviewing Microsoft's offer, which includes transferring the rights to all current and future Activision games published over the next 15 years to Ubisoft Entertainment SA, excluding the European Economic Area from the divestment.

This reconsideration of a CMA merger decision is extraordinary, driven by a series of twists in the deal's global regulatory battles. The deal gained unexpected momentum as the UK decided to reevaluate based on new information. In the United States, Microsoft overcame the Federal Trade Commission's legal challenge to the acquisition. In May, the European Union approved the agreement with certain behavioral conditions.

Sarah Cardell, head of the CMA, was cited by Bloomberg, saying, "This doesn't indicate approval. We will meticulously and objectively scrutinize the specifics of the revised deal and its impact on competition, while taking into account third-party input."

Additionally, Microsoft missed the initial deadline of July 18, set in January 2022, to finalize the acquisition due to regulatory obstacles. Activision agreed to extend the deadline to October 18, granting Microsoft additional time to address outstanding concerns.

In July, Microsoft urged the UK regulator to reconsider its April decision, asserting that circumstances had "substantially changed" following the US court ruling and a subsequent agreement to license Activision's popular game, Call of Duty, to rival Sony Group Corp. The proposed divestment might obviate the need for the CMA to rule on that request.

Furthermore, the CMA has expressed a preference for structural solutions to address worries about anti-competitive transactions. In line with this, Microsoft and Activision have been seeking a divestiture that satisfies regulators without compromising what Microsoft considers essential aspects of the acquisition. For instance, Microsoft has openly rejected the idea of selling off the Call of Duty franchise. The initial investigation phase will now recommence, with the CMA setting a legal deadline of October 18.