UK Regulator Eases Stance on Activision-Microsoft Deal

Image of gamers playing Overwatch 2

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Key Takeaways

  • U.K. regulators concluded that the proposed purchase of video game maker Activision Blizzard (ATVI) by Microsoft (MSFT) would not harm competition in the gaming console market.
  • This reversed an earlier provisional statement saying that it would be detrimental to the market if Microsoft were to limit Activision games to its own Xbox console.
  • Gains of 6% for Activision Blizzard stock made it the top performer on the S&P 500 on March 24.

Activision Blizzard (ATVI) was the best-performing stock in the S&P 500 after U.K. regulators reversed an earlier decision and determined that Microsoft's (MSFT) proposed $69 billion purchase of the video game maker won't lessen competition in the gaming console market.

The Competition and Markets Authority (CMA) had previously said in a provisional finding that the deal would be harmful if Microsoft limited popular Activision games such as Call of Duty (CoD) to its own Xbox console, "weakening an important rivalry" between Xbox and Sony Group's (SONY) PlayStation.

However, the CMA indicated on March 24 that, after receiving new evidence, it determined that "it would not be commercially beneficial to Microsoft to make CoD exclusive to Xbox."

Partial Victory

The ruling was only a partial victory for the companies. The CMA noted that it is still considering responses to its concerns about how the acquisition would affect competition in the supply of cloud gaming services. The CMA added that it plans to release its final report on April 26.

Sony has strongly argued against allowing the agreement to go through, saying it would severely limit competition and hurt consumers. It supported the CMA's initial position in February.

Shares of Activision Blizzard were up 6%, while Microsoft shares gained 1%. Shares of Sony Group fell 0.8%.

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  1. "CMA Narrows Scope of Concerns in Microsoft – Activision Review."

  2. "The CMA Investigation Into the Microsoft and Activision Blizzard Merger."

  3. Cleary, Gottlieb, Steen & Hamilton LLP. "Microsoft/Activision Blizzard: Sony Interactive Entertainment Observations on the CMA's Remedy Notice."

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