Microsoft Might Be Preparing to Close ActiBlizz Deal Despite UK Opposition

According to a paywalled report from MLex (via ResetEra’s Ida), Microsoft might be exploring legal options to close its groundbreaking $68.7 billion deal to acquire Activision Blizzard even if it cannot overturn the UK regulator’s opposition.

As you most certainly remember, the Competition and Markets Authority (CMA) blocked the deal in late April to prevent alleged competition issues in the cloud gaming market. Microsoft has filed an appeal to the Competition Appeal Tribunal (CAT), though even if it succeeds with the appeal, the ball will roll back to the CMA anyway.

Since success is far from guaranteed, it makes sense that Microsoft would look into other ways to close the deal. According to the MLex report, some lawyers were hired and tasked to investigate such options.

The first one would entail Activision removing itself from the United Kingdom while its games would continue to be sold there through a third-party distributor. Alternatively, Microsoft could forcefully close the transaction and try to argue that the interim order placed by the CMA against acquiring any interest in Activision was illegal. The lawyers are also looking at challenging the final CMA veto in court, alleging that the UK regulator shouldn’t be allowed to impose a global ban just to protect the interests of UK customers.

Any of these options would be considered ‘nuclear’ under normal circumstances. However, Microsoft CEO Satya Nadella didn’t deny such possibilities when an interviewer asked him whether there was any chance to just close the deal and deal with whatever consequences may come in the UK market.

While not included in the MLex report, another option has been floated by analysts such as Michael Pachter from Wedbush Securities. That is to simply carve out Activision Blizzard games from the UK version of Game Pass, while those same games would be added to the Game Pass versions elsewhere in the world. The feasibility of the option remains to be verified.

However, what’s clear is that Microsoft seems willing to play hardball to get Activision Blizzard. Phil Spencer, CEO of the Gaming division, reassured fans and employees alike that the acquisition is only part of Microsoft’s overall long-term strategy to gain ground in the gaming market. Still, it’s obvious it would be a massive accelerator to the company’s plans, especially for the Game Pass subscription service.

The Microsoft/Activision Blizzard deal has already been waved through by 39 countries: China, Japan, South Korea, Chile, South Africa, Brazil, Ukraine, Serbia, and the whole European Economic Area. The next countries to share a verdict on the merger are expected to be Australia, New Zealand, and Canada. The process is still likely to take some time in the United States, where the Federal Trade Commission sued to block the deal, with an evidentiary hearing scheduled for August.