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Microsoft Seals A $69 Billion Activision Merger Following Approval From Britain

Microsoft Seals A $69 Billion Activision Merger Following Approval From Britain
Xbox creator Microsoft completed its $69 billion acquisition of Activision Blizzard on Friday, bolstering its position in the video gaming market with top-grossing games like "Call of Duty" to more effectively fight with Sony, the market leader.
The largest gaming merger, first announced in January 2022, cleared its final major barrier earlier in the day after Microsoft agreed to sell streaming rights for Activision's titles to ease competition concerns.
The accomplishment is a significant victory for the American tech company in its campaign to draw more customers to its Xbox consoles and Game Pass subscription service. Sony, whose
PlayStation game systems sell more than the Xbox, generates more gaming revenue than Microsoft.
CEO of Microsoft Gaming Phil Spencer wrote on the X social media network, formerly known as Twitter, "Today is a good day to play." Bobby Kotick, the CEO of the video-game publisher Activision, will continue in that position through the end of 2023, under his direction.
The acquisition has been hailed by Spencer as an opportunity for Microsoft to enter the more than $90 billion mobile game market.
Popular mobile games from Activision like "Candy Crush Saga" and "Call of Duty Mobile" were left out of the cloud streaming agreement that Microsoft made with France's Ubisoft Entertainment in order to win Britain's permission.
"Microsoft instantly has more than $3 billion of mobile revenues," said Wedbush Securities analyst Michael Pachter.
"The big benefit is that Microsoft has a vision that they are going to deliver games through a subscription, and they need more content to give subscribers. So, this is a big step toward having sufficient content," he said.
The US Federal Trade Commission continues to oppose the acquisition despite having been unsuccessful in doing so in the past. The FTC stated on Friday that it will "assess" Microsoft's contract with Ubisoft while concentrating on its appeal.
Analysts, though, predict that little will change. "The impact of an FTC challenge will be limited to incremental concessions in the future," said D.A. Davidson analyst Gil Luria.
The acquisition was initially denied in April by Britain's Competition and Markets Authority, which was concerned that it may give the American computer giant a monopoly over the burgeoning cloud gaming market. This was the main obstacle.
Since Britain left the European Union, the transaction was the CMA's toughest test of its ability to compete globally against the tech titans.
In response to complaints from the merging companies, the regulator claimed on Friday that "sticking to its guns" had resulted in a decision that was better for competition, consumers, and economic growth.
The CMA called Microsoft's streaming concession a "game changer" and said that it was the only competition agency in the world to achieve this result.
"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," it said in a statement.
The merging parties were incensed by the CMA's decision, with Microsoft declaring that Britain was closed for business.
With Finance Minister Jeremy Hunt noting that he did not want to jeopardise the CMA's independence but that regulators also needed to concentrate on promoting investment, the British government only provided the CMA with minimal support.
Sarah Cardell, chief executive of the CMA, said the regulator had "delivered a clear message to Microsoft that the deal would be blocked unless they comprehensively addressed our concerns and we stuck to our guns on that."
She said that the CMA made decisions "free from political influence" and that business pressure would not affect its judgement.
According to Quilter Cheviot equity analyst Ben Barringer, the CMA would view it as a triumph but would need to be cautious not to overregulate the tech industry.
"There are fears the UK is a bad place to do business and the tech industry in particular will be watching its moves closely," he said.
In May, the European Commission approved Microsoft's promises to licence Activision titles like "Overwatch" and "World of Warcraft" to other platforms.

Christopher J. Mitchell

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