A UK competition regulator is slightly watering down the deal between Microsoft and Activision, sending the game publisher’s shares soaring.
Activision Blizzard Inc (NASDAQ:ATVI) shares rose on Friday in positive news on the UK Competition and Markets Authority’s position on the Microsoft (NASDAQ: MSFT) deal. The UK competition regulator has reportedly watered down the impending takeover of Microsoft. In a statement, the CMA stated that it no longer considered the computer software giant’s acquisition of Activision to be a threat to gaming competition.
On Friday, Martin Coleman, who chaired the CMA inquiry, said:
“Having considered the additional evidence provided, we have now tentatively concluded that the merger will not result in a substantial decrease in competition in console gaming services because the cost to Microsoft of retaining Call of Duty from PlayStation would outweigh any gain from taking such action. ”
However, Coleman also noted that the regulatory body is still investigating other gambling-related matters.
“Our tentative view that this deal raises concerns in the cloud gaming market is not affected by today’s announcement. Our investigation remains ongoing to be completed by the end of April,” said the chair of the independent expert panel.
Activision shares rise 5% as Microsoft looks to close the acquisition
Activision shares rose more than 5% during the US trading session after the CMA announced its verdict on Microsoft. By contrast, shares of the software giant fell marginally amid a broader market downturn.
Nonetheless, the CMA’s seal of approval on the Activision acquisition is a victory for Microsoft as it looks to expand its video game brand. In a statement, a Microsoft spokesperson said:
“We appreciate the CMA’s rigorous and comprehensive review of the evidence and welcome their updated interim findings.”
The tech company’s renewed commitment to gaming is also reflected in its acquisition of Bethesda Softworks’ parent company, ZeniMax Media.
Previously, the CMA feared the worst regarding Microsoft’s acquisition of Activision, citing higher prices and fewer options. Notably, the UK competition regulator also worried that the deal could hamper competition in the console gaming market. However, the regulator backed down after receiving substantial feedback from various stakeholders on the deal.
Other developments of the agreement
Microsoft has also recently secured additional support from other companies that were previously ambivalent towards the Activision deal or were outright opposed. The tech giant gained support by assuring competitors that it would share Activision’s most coveted IP with these other platforms. For example, Microsoft revealed last month that it signed a decade-long binding legal agreement with Nintendo to share “Call of Duty.”
Microsoft has also previously expressed a similar stance towards its biggest gaming rival, Sony, which produces the popular PlayStation console. However, Sony has yet to play with the computer software giant regarding its collaboration offer.
The company founded by Bill Gates offered an olive branch to chip giant Nvidia (NASDAQ: NVDA), which previously opposed the Activision acquisition. Microsoft said it has signed an agreement with the Santa Clara-based company to bring its Xbox games to Nvidia’s cloud gaming service. In addition, Microsoft plans to bring Activision’s library of games to Nvidia’s gaming-focused platform after the acquisition closes.
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Tolu is a Lagos-based blockchain and cryptocurrency enthusiast. He likes to demystify the crypto stories down to the basics so that anyone anywhere can understand them without too much prior knowledge. When he’s not up to his neck in crypto-stories, Tolu likes music, loves to sing, and is an avid movie buff.
