Microsoft's Deal To Buy Activision Now Looking More Positive In The UK In Last Big Hurdle

Microsoft scored a partial victory in its bid to acquire Activision Blizzard this week, with a US district court judge in the US paving the way for the deal to go through. However, the $68.7 billion merger is not signed and completed yet, and some key hurdles remain, including the status of the buyout in the UK.

Following Microsoft's partial victory in the US, company president Brad Smith said the company's focus now "turns back to the UK." He said Microsoft will now consider "how the transaction might be modified" in a way that is "acceptable to the CMA." Not only that, but Microsoft's appeal has been halted for the time being.

"Microsoft and Activision have agreed with the CMA that a stay of litigation in the UK would be in the public interest and the parties have made a joint submission to the Competition Appeal Tribunal to this effect," Smith said.

Microsoft Gaming CEO Phil Spencer said much the same in a memo to staff obtained by The Verge. "After today's decision, we are turning our focus to the UK," Spencer said. The executive went on to say, "Thank you to everyone who has devoted their time and dedication in support of our acquisition."

He added: "We embarked on this deal with a clear vision for meeting players where they are, and with today’s decision by the Court, we take an important step forward in bringing this vision to life."

For its part, the CMA released a statement saying it is "ready to consider any proposals from Microsoft to restructure the transaction in a way" that would address its concerns.

The CMA said in its final report in April that it was blocking the deal over concerns about the cloud gaming market, not the possibility of Microsoft making Call of Duty exclusive to Xbox. Microsoft and Activision have lawyered up and are bringing an appeal to the CMA's Competition Appeal Tribunal to settle the matter, but this is seemingly paused for now.

As for any potential remedies, Microsoft did not name any outright, but presumably they would be in the area of cloud gaming.

To be clear, what happened on Tuesday was US district court judge Jacqueline Corley sided with Microsoft to prevent the Federal Trade Commission from getting the preliminary injunction it wanted to try to stop the deal from going through. The FTC was denied that preliminary injunction, and now the FTC will hold its own case beginning August 2, 2023. If a resolution with the CMA is reached in the meantime, Microsoft might be able to close its deal before any FTC ruling could be made, at which point it would be more difficult for the government to take any action against the deal.

The $68.7 billion that Microsoft is proposing to pay for Activision Blizzard represents the biggest-ever acquisition in gaming history and among the largest in any business. Microsoft's previous biggest acquisition ever was LinkedIn, which it acquired in 2016 for $26.2 billion. The Activision Blizzard deal is 2.5x bigger than that.