Why Microsoft’s $69 billion Activision deal revolves around London, not Washington

(Bloomberg) — The acquisition of Activision Blizzard Inc. Microsoft Corp.’s $69 billion valuation. face a major decision in the UK as the country’s merger watchdog marks its arrival as a global regulator with findings that could guide the completion of the merger. all the great deals — or fall apart. individual.

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The Competition and Markets Authority is expected in the coming days to publish its interim results, signaling whether the agency aims to block the deal or remove it with specific remedies. like a sell-off. The regulator flagged concerns that the deal could cause competition problems in the console and subscription markets, as well as the nascent cloud gaming sector.

Microsoft first announced the transaction last year, looking to add blockbuster games like Call of Duty to a business that already includes Xbox consoles, the Halo franchise, and Minecraft world-building software. .

However, the partnership has soured for global regulators, who are concerned that Microsoft could make it more difficult for rival platforms to gain free access to popular titles. Activision’s best. Crucially, the CMA’s filing will come before decisions from the European Union and the US Federal Trade Commission, which are locked in a lengthy legal process after formally suing to veto. transaction.

Jennifer Rie, an analyst with Bloomberg Intelligence, said: “The CMA’s decision is significant because if they choose to block the deal, the companies will have very little recourse — UK courts rarely overturns the decision to merge CMA. “The conditions will have to be thorough, beyond the license for Call of Duty,” she said, adding that “unconditional clearance is unlikely.”

Microsoft this week received the EU regulator’s initial findings in a so-called counter-statement, setting out the bloc’s main concerns about the deal, according to people familiar with the review. Last year, the tech company publicly offered to grant rival Sony Group Corp. 10-year license for Call of Duty, but they will now have several weeks to formally submit remedies in the EU investigation in line with official concerns.

Read more: US files lawsuit against Microsoft-Activision to block EU settlement

Unlike in the EU, where regulators and Microsoft have informally discussed possible remedies, the UK regulatory process has traditionally been more difficult to reach and meetings with Discussion did not take place prior to the CMA’s preliminary decision.

However, updated CMA guidelines from last year now allow companies to suggest potential remedies in light of interim findings.

“The FTC can rely on the CMA to block it,” said Anne C Witt, a law professor at EDHEC Business School. “The European Commission just sent a statement of protest, so there is no way they can get there before the CMA. The CMA will win this and it will be very interesting.”

The CMA emerged from the shadow of the European Commission after the UK left the EU – with the regulator reviewing previous deals that met their fate in Brussels, not London. In recent shows of strength, it has hit major Tech companies, including telling Meta Platforms Inc. that they had to cancel their acquisition of Giphy after concerns that they might strangle the GIF market.

A Microsoft spokesperson said: “To drive the gaming market to the benefit of all stakeholders, we believe it is important to look at solutions that are clear and easy to enforce for potential competition concerns”.

“Our commitment to granting long-term access to Call of Duty to Sony, as well as Nintendo and Steam, to achieve this goal is to protect the interests of the agreement for consumers and developers as well as promote competition in the market.

A spokesperson for the CMA declined to comment

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