Game on! Microsoft closes in on £60bn Activision deal

Microsoft is a step closer to securing its £60billion acquisition of Activision Blizzard after a US court gave the deal the go-ahead and UK regulators offered fresh hope.

A US judge has rejected the Federal Trade Commission’s attempt to halt the deal, dismissing arguments that the tie-up would substantially lessen competition in the gaming market.

The takeover would be the biggest in the world of gaming and would mean Microsoft, the company behind Xbox consoles, would own popular Activision titles including Call Of Duty and Crash Bandicoot 4.

‘The Federal Trade Commission 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,’ judge Jacqueline Scott Corley wrote in her decision.

Shares in Activision shot up by 10.06 per cent in New York following the update – and soon after the ruling, the UK competition watchdog signalled it was open to discussions, having earlier opposed the deal.

The Competition and Markets Authority (CMA) had blocked it in April after concluding it would lead to ‘reduced innovation and less choice for UK gamers’.

It was seen as a major step for the CMA, which was not known for baring its teeth in such a way.

The watchdog was particularly worried that the US tech giant could gain a stranglehold over cloud gaming – the streaming of games over the internet. 

The decision put it at odds with European regulators, which said the deal could go through a month later.

But in a statement last night, the CMA said it was ‘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’.

Both companies had planned to appeal against the decisions, and hearings had been scheduled to begin at a tribunal on July 28.

Brad Smith, president of Microsoft, said: ‘After today’s court decision in the US our focus now turns back to the UK. 

‘While we ultimately disagree with the CMA’s concerns, we are considering how the transaction might be modified in order to address those concerns in a way that is acceptable to the CMA.’

Smith had previously slammed the CMA’s decision, saying it left the UK ‘closed for business’.

Bobby Kotick, chief executive of Activision Blizzard, said: ‘We’re optimistic that today’s ruling signals a path to full regulatory approval.’

The Federal Trade Commission has until Friday to appeal against the decision in the US. The deal would be the largest for Microsoft and the biggest in the history of the video game business.

RBC Capital Markets analyst Rishi Jaluria said it would make Microsoft the world’s third-biggest gaming company and ‘the market clearly did not expect that and hence why Activision stock is up’.

FTC spokesman Douglas Farrar said it was ‘disappointed… given the clear threat this merger poses to open competition in cloud gaming, subscription services and consoles. We’ll be announcing our next step to continue our fight to preserve competition and protect consumers’.