Microsoft Corporation (MSFT.O) is poised to receive approval from the European Union for its $69 billion (roughly Rs. 5,68,094 crore) acquisition of Activision (ATVI.O), according to three sources familiar with the matter. The approval is expected in exchange for Microsoft offering licensing deals to its competitors, a move that will help the company overcome a significant obstacle.
In January of last year, Microsoft announced its bid to acquire Activision, which is its largest acquisition to date. The purpose of this acquisition is to compete with industry leaders Tencent (0700.HK) and Sony (6758.T) in the thriving video gaming market, as well as to venture into the metaverse, a virtual online world where individuals can work, play, and socialize.
The European Commission, which is set to make a decision on the deal by April 25, is not expected to require Microsoft to divest any assets in order to gain approval, according to the sources.
In addition to offering licensing deals to competitors, Microsoft may also need to provide other behavioral remedies to alleviate concerns from parties other than Sony, as per one of the sources. These remedies typically pertain to the future actions and behavior of the merged company.
Following the publication of the Reuters story, Activision shares saw a 1.8 percent increase in pre-market trading, and later rose by 2.6 percent.
Last month, Microsoft President Brad Smith stated that the software giant was prepared to offer licensing deals to competitors in order to address antitrust concerns. However, Microsoft stands firm in its decision not to sell Activision’s highly lucrative “Call of Duty” franchise. Smith explained that it is neither practical nor realistic to separate one game or segment of Activision from the rest.
The European Commission declined to comment on the matter, while Microsoft affirmed its commitment to providing effective and easily enforceable solutions to address the concerns of the European Commission. A Microsoft spokesperson stated that granting long-term, 100 percent equal access to Call of Duty to Sony, Steam, NVIDIA, and other companies preserves the benefits of the deal for gamers and developers, while also increasing competition in the market.
Furthermore, Microsoft recently signed 10-year licensing deals with Nintendo (7974.T) and Nvidia (NVDA.O), conditional on receiving approval for the Activision deal. These agreements will bring Call of Duty to their respective gaming platforms.
While the deal faces regulatory challenges in the UK, where the competition agency has suggested that Microsoft divest the Call of Duty franchise to address concerns, the US Federal Trade Commission (FTC) has sought a court order to block the deal.
© Thomson Reuters 2023
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Basant Kasayap is an entertainment aficionado who delves into the glitz and glamour of the entertainment industry. From Hollywood to Bollywood to regional cinema, she offers readers an insider’s perspective on the world of movies, music, and pop culture.
