Microsoft has won its court battle against the US Federal Trade Commission (FTC) overcoming one of the largest hurdles in acquiring US gaming company Activision Blizzard. The question remains, however, if the UK Competition and Markets Authority (CMA) will follow suit and green light the aquisition.
A US judge approved the videogame makers’ $69bn merger on Tuesday (11 July) following months of major pushback from the FTC.
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The US regulator had previously argued that an approved acquisition would reduce competition by giving Microsoft the right to deny its rivals access to Activision’s games.
However, after a week-long court battle, a US judge ruled against these claims.
US Judge Scott Corely wrote in her deciding decision: “The FTC has not shown it is likely to succeed on its assertion the combined firm will probably pull Call of Duty from Sony PlayStation, or that its ownership of Activision content will substantially lessen competition in the video game library subscription and cloud gaming markets.”
Microsoft President Brad Smith, who has been critical of the opposition from both US and UK regulators, said his company was “grateful” for the ruling.
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By GlobalDataSmith said the videogame maker will now be turning its attention to the UK.
Will UK regulators follow in the footsteps of the US?
The UK’s CMA has been seen as a global outlier in its fierce opposition to the deal.
According to both the CMA and Smith, the two parties had agreed to put discussions on hold while Microsoft came up with ways to address the concerns raised around the deal.
Most of the CMA’s initial concerns about the merger have surrounded the cloud gaming market.
Microsoft currently owns around 60-70% of global cloud gaming services.
A spokesperson for the CMA said: “We stand ready to consider any proposals from Microsoft to restructure the transaction in a way that would address the concerns set out in our final report.”
Claire Trachet, CEO of business advisory Trachet, told Verdict she believes the CMA’s willingness to consider a reshaped deal “demonstrates its commitment to preserving competition, whilst recognising the realities of a globalised economy”.
Trachet added that the CMA also recognises “the UK’s desire to remain an attractive platform for M&A activity of this scale.”
The potential reversal from the CMA comes after Microsoft’s Brad Smith slammed the regulators for its initial opposition to the deal.
Smith accused the CMA of appearing to have a “flawed understanding of this market and the way the relevant cloud technology works.”
“The CMA’s decision rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the United Kingdom,” Smith added.
Trachet said that “despite recent scrutiny for hindering the UK’s standing as a global investment hotspot” she believes the “CMA has remained persistent”.
“Promoting a vibrant and competitive market in burgeoning sectors like AI and cybersecurity,” Trachet said.
Adding: “The outcome of this colossal deal could very well define their position for years to come.”
