Microsoft Is Now Free to Complete its Acquisition of Activision Blizzard With Some Restrictions

May 23, 2023
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Stephanie Bedard-Chateauneuf
Microsoft is free to complete the Activision Blizzard acquisition as of May 22, but there are some significant constraints that will likely prohibit it from doing so for some time.

Microsoft is free to complete the Activision Blizzard acquisition as of May 22, but there are some significant constraints that will likely prohibit it from doing so for some time. This historic occasion for the company's efforts to acquire the Call of Duty maker comes just after Microsoft's acquisition of Activision Blizzard was approved by China.

Prior to Beijing's approval, the $68.7 billion transaction had previously been approved by Saudi Arabia, Brazil, Serbia, Chile, Japan, South Africa, Ukraine, and the European Union, among others. While Australia and New Zealand are currently investigating the proposed merger, the prospective merger's major outstanding regulatory difficulties are overseas. One of them is from the United States, where the Federal Trade Commission filed a lawsuit to prevent Microsoft from acquiring Activision Blizzard in December 2022.

Another attempt to thwart the acquisition occurred in the form of a so-called "gamer lawsuit" filed against Microsoft. Following its filing in December, the complaint was dismissed by a first-instance court in March, giving the plaintiffs a 20-day window to file a fresh claim, which they did. Following that, the complainants sought a preliminary injunction to halt the transaction, which was denied on May 19. However, prior to that, Microsoft promised not to try to close the deal before May 22 in order to give the court ample time to rule on the injunction request.

This was the company's last remaining deferment promise. Since that deadline has passed, Microsoft can now begin closing procedures on the acquisition for the first time since announcing it in January 2022, not least because neither the gamer lawsuit nor the pending trial with the FTC resulted in a successful injunction motion against the deal. However, while Microsoft could potentially complete the Activision Blizzard acquisition without FTC permission, the software giant is unlikely to do so.

The main reason for this is that the deal was halted by the British Competition and Markets Authority in late April. According to the early conclusions of the CMA, acquiring Activision Blizzard might give Microsoft's Xbox business too much power in the nascent cloud gaming industry. Rather than devoting resources to policing Microsoft's post-acquisition movements in this new business indefinitely, the regulator judged that rejecting the merger was a simpler method to protect competition in the cloud gaming sector.

As a result, Microsoft is unlikely to try to close the purchase while the CMA's ruling is still in effect. This is partly due to the fact that the only option to complete the purchase without CMA permission would be for Microsoft's gaming division to withdraw from the UK, or at the very least stop supplying cloud gaming services in the nation. So far, the corporation has shown no indication that it is willing to make such a compromise in order to complete the transaction. Because the CMA's findings are still preliminary, Microsoft's window to appeal the judgment hasn't even opened.