Microsoft and Activision Blizzard (Act. Blizz.) have announced an extension to the deadline for the completion of their acquisition deal. The original deadline was set for July 18, 2023, but it has now been extended to October 18. This extension allows for more time to handle regulatory concerns and secure approval from the British Competition and Markets Authority (CMA). According to Reuters, the deal between the two brands has the consent of the govt of 39 nations so far. Let us take a look at a few details about the deal
Background
Microsoft, a leading tech company, and Act. Blizz., one of the largest video game publishers, announced their intention to merge in January 2023. The deal, valued at $69 billion, aims to bring together Microsoft’s expertise in tech and cloud services with Act. Blizz. vast portfolio of popular gaming franchises. However, while it has the deal has the consent of 39 nations so far, the CMA is the biggest hurdle to the deal. Recall that back in April, the CMA rejected the deal because it is worried about the loss of rivalry in the cloud gaming market.
The Deadline Extension
The decision to extend the deadline to October 18 comes as both Microsoft and Act. Blizz. continues to navigate the regulatory process and address any concerns raised by the CMA. This extension provides ample time for talks to go on to ensure a smooth closing to the deal.
The CMA said on Monday it had had a “productive” talk with Microsoft on potential remedies. But the CMA has so far not shifted grounds on the veto. On the UK side, talks are ongoing but it will take days or even weeks, and the CMA has pushed back the deadline for publishing a final decision to 29 August.
Regulatory Scrutiny
The merger between Microsoft and Act. Blizz. has attracted close regulatory scrutiny. Regulatory bodies are responsible for ensuring fair competition and protecting consumer interests. Microsoft believes that the extended deadline will allow them to work through the remaining regulatory issues. It will also have time to address any concerns that may arise.
The deal between both brands has faced many issues which is stopping the deal from pulling through. Here are some of the issues they have faced.
1. Regulatory Scrutiny:
The merger between Microsoft and Act. Blizz. has attracted close regulatory scrutiny. The US Federal Trade Commission (FTC) at some point tried to stop the deal via the court. The UK and EU regulators have also scrutinized the deal closely. While the EU has now shifted grounds, the UK remains adamant. The major and specific concern by regulatory agencies is that the deal could kill competition in the cloud gaming market.
Gizchina News of the week
2. Competition Concerns:
The FTC has expressed concerns that the deal could let Microsoft degrade Activision’s game quality or player experience on rival consoles like Nintendo and Sony’s PlayStation. It believes that this will help the company to manipulate prices or change the terms and timing of access to content.
3. Sony’s Objections:
Microsoft offered Sony a 10-year deal on new Call of Duty games last month. However, Sony has not yet agreed to the offer. A similar deal was agreed upon between Nintendo and Valve, though. It could see Call of Duty heading to Nintendo consoles if the Act. Blizz. deal pulls through. Microsoft is now doing all it can to bring Sony to the table and agree to a deal.
4. Legal Issues:
Microsoft faced the FTC in court over the deal. The FTC has asked a court for a temporary order to prevent the deal from closing while the regulator continues to review the details.
Implications of the extension of the deadline
The extension of the deadline could have several potential implications:
1. More time for regulatory approval:
The extension of the deadline could give Microsoft and Activision Blizzard more time to secure regulatory approval from the UK government, which has been a major hurdle for the deal. The companies may need to make additional concessions or changes to the deal to address the concerns of UK regulators.
2. More time for negotiations:
The extension of the deadline could also give Microsoft and Activision Blizzard more time to negotiate the terms of the deal. The companies may be able to use the extra time to address any outstanding issues or concerns and come to a more favorable agreement.
3. Uncertainty for investors:
The extension of the deadline could create uncertainty for investors who may be unsure about the future of the deal. The delay could also impact the stock prices of both companies, as investors may become more cautious or hesitant to invest until the deal is finalized.
Implications and Impact on the Video Gaming Industry
The merger has big implications for the gaming industry. The combination of Microsoft’s resources and Act. Blizz’s huge portfolio of popular video gaming franchises, including Call of Duty, World of Warcraft, and Candy Crush, has the potential to reshape the gaming landscape. By leveraging Microsoft’s cloud services and tech, the merged entity can enhance the gaming experience for players. It could also introduce new innovations to the industry. Also, the merger may lead to increased competition and collaboration within the video game market. This will be of benefit to both developers and gamers.
Final Words
The extension of the deadline for the completion of the Microsoft-Activision Blizzard acquisition deal to October 18 provides additional time for negotiations and regulatory processes. This extension allows both companies to address any concerns raised by the UK regulator and work towards the successful completion of the merger. The merger between Microsoft and Activision Blizzard has the potential to reshape the gaming industry by combining Microsoft’s technology expertise with Activision Blizzard’s popular gaming franchises. This merger could lead to new innovations and enhanced gaming experiences for players. As the deadline approaches, the gaming industry eagerly awaits the outcome of this significant deal.
