FILE - The Microsoft logo is pictured at the Mobile World Congress 2023 in Barcelona, Spain, on March 2, 2023. The Internal Revenue Service says Microsoft owes the U.S. Treasury $28.9 billion in back taxes, plus penalties and interest, the company revealed Wednesday, Oct. 11, in a securities filing. (AP Photo/Joan Mateu Parra, File)
LONDON (AP) – Microsoft’s purchase of Call of Duty maker Activision Blizzard won final approval Friday from Britain’s competition watchdog, reversing its earlier decision to block the $69 billion gaming deal and removing the final obstacle for one of the largest tech transactions in history.
The Xbox maker’s quest to acquire Activision – maker of other blockbuster games like Candy Crush, World of Warcraft, Diablo and Overwatch – could close imminently ahead of a Wednesday deadline. That would wrap up a merger delayed for close to two years by intense scrutiny from authorities around the world.
The blessing from the U.K.’s Competition and Markets Authority was expected after it gave preliminary approval last month to a revamped Microsoft proposal meant to address concerns that the deal would harm competition and hurt gamers, especially in the emerging cloud gaming market where players can avoid buying pricey consoles and stream games to their tablets or phones.
“The new deal will stop Microsoft from locking up competition in cloud gaming as this market takes off, preserving competitive prices and services for UK cloud gaming customers,” the watchdog said.
Microsoft President Brad Smith said the tech giant was grateful for the “thorough review and decision” and that the deal “will benefit players and the gaming industry worldwide.”
Activision CEO Bobby Kotick also welcomed the news: “We look forward to becoming part of the Xbox Team.”
Gamers will benefit from the deal, said Joshua Chapman, managing partner at venture capital firm Konvoy, which invests in video game startups.
Plus, it will be “productive for the gaming industry as a whole and healthy for competition in the gaming market,” he said.
Since the deal was announced in January 2022, Microsoft has secured approvals from antitrust authorities covering more than 40 countries. Crucially, it got a thumbs-up from the 27-nation European Union after agreeing to allow users and cloud gaming platforms to stream its titles without paying royalties for 10 years.
But the deal faced resistance from British and American regulators who worried it would stifle competition in the video game industry. Top rival Sony also feared it would limit PlayStation gamers’ access to Call of Duty, Activision’s long-running military shooter series.
The U.S. Federal Trade Commission lost a court bid to pause the deal so that its in-house judge could review it. The FTC hasn’t given up, appealing the decision and last month filing notice of its plan to resume that trial. That signals the U.S. regulator’s intention to unwind the deal even after it closes.
In the meantime, the U.K. regulator was the last major obstacle to the transaction going through. To gets its approval, Microsoft will sell off cloud streaming rights outside the EU and three other European countries for all current and new Activision games released over the next 15 years to French game studio Ubisoft Entertainment.
British regulators had initially blocked the transaction over concerns Microsoft could withhold Activision titles from the cloud gaming market. Then, in an unprecedented move, the U.K. watchdog said it needed to reconsider.
One factor was the EU’s approval, granted after Microsoft promised to automatically license Activision titles royalty-free to cloud gaming platforms. Another “material change of circumstance,” according to court documents, was an agreement Microsoft signed with Sony to make Call of Duty available on PlayStation for at least 10 years.
But the regulator still criticized how the deal came together and warned other companies not to use the “tactics employed by Microsoft.”
“Microsoft had the chance to restructure during our initial investigation but instead continued to insist on a package of measures that we told them simply wouldn’t work,” the watchdog’s CEO, Sarah Cardell, said in a statement. “Dragging out proceedings in this way only wastes time and money.”
The U.K. regulator “deserves credit for imposing a structural remedy on Microsoft that is significantly stronger than the weak commitments accepted by the European Commission,” said Max von Thun, director of the Europe office of the Open Markets Institute, a proponent of stronger antitrust enforcement.
But the CMA’s flip-flopping makes the U.K. regulator look “weak and indecisive,” he said.
“Moving forward, there is now a serious risk that in their dealings with the CMA, merging companies and their advisors will no longer take no for an answer,” von Thun said.
___
AP Technology Writer Matt O’Brien contributed from Providence, Rhode Island.
