Microsoft’s still-ongoing pursuit of Activision Blizzard, a deal with a hefty price tag of $68.7 billion, has been a rollercoaster of legal hurdles. As the dust settles from a recent US court victory against the Federal Trade Commission’s injunction, the focus now shifts back across the Atlantic, to the United Kingdom.
Immediately following the U.S. Federal Court’s ruling against the FTC, Microsoft and the Competition and Markets Authority (CMA) of the UK have hit the pause button on their legal bout.
In a classic David versus Goliath standoff, Microsoft is coming back to the negotiation table to reshape the transaction. The strategy seems straightforward enough, but what does this mean for the anticipated Activision Blizzard acquisition and how will it impact the cloud-gaming market?
Our statement on the mutual request with the CMA for a pause of our appeal in the UK: pic.twitter.com/8Aky2IJjxS
— Brad Smith (@BradSmi) July 11, 2023
The CMA has been a staunch opponent of Microsoft’s bid to acquire Activision Blizzard, stating concerns about the creation of a monopoly player in the nascent cloud-gaming market. The regulator expressed fears of Microsoft withholding its new acquisitions from competitors, potentially stunting growth in a burgeoning industry. The appeal hearing, which was set to begin on July 28, could now see a reset following these new developments.
However, we shouldn’t mistake Microsoft’s acquiescence as a complete surrender. Microsoft President Brad Smith’s recent statement suggests that Microsoft is open to discussions for a deal that’s fundamentally beneficial for the company.
It’s clear Microsoft is willing to flex its negotiation muscle. After all, they have a track record of winning. Having defeated an FTC injunction to halt the deal in the United States, they’re not averse to legal battles. Yet, Microsoft’s move to temporarily suspend litigation in the UK indicates a shift in tactics. This willingness to explore different paths to the same end game has revealed a subtle, yet profound strategy on Microsoft’s part.
The decision to hold the litigation has been jointly communicated to the Competition Appeal Tribunal (CAT), the body that oversees CMA decisions. While the tribunal still needs to greenlight the agreement, the likelihood of the CAT acting as a rubber stamp in this situation seems plausible. It seems more beneficial for both parties to hash out their differences over a negotiation table than in a courtroom.
In light of this announcement, the previous closing date for the Microsoft-Activision deal, set for July 18, may witness a minor delay. However, given the scale of the transaction and its potential implications for the gaming market, a short-term extension seems reasonable. Besides, Activision Blizzard has voiced its unwillingness to a long-term delay, adding a bit of pressure to the negotiation timetable.
While the recent announcement hints at a potential thawing of relations between Microsoft and the CMA, the final verdict is still hanging in the balance.
As the world eagerly watches this corporate chess game unfold, one thing is clear: a resolution is in the public interest.
Ultimately, the Activision Blizzard acquisition will have a profound impact on the cloud-gaming market, a crucial segment in the evolving digital landscape. But like all major corporate moves, it’s not just about the players directly involved. It’s about the ripples that this deal will send through the industry, the stakeholders, and the consumers. As such, this compromise isn’t just about Microsoft and the CMA – it’s a negotiation that will decide the future of gaming.
