Multiple industry analysts said they were confident thatMicrosoftwill complete its proposed acquisition of Activision Blizzard in spite of recent regulatory roadblocks. Their comments arrive weeks afterXbox head Phil Spencer echoed a similar sentiment, claiming he remains highly optimistic about the tech giant’s chances of wrapping up the $69 billion transaction.
The British Competition and Market Authority today released its preliminary findings of an antitrust investigation into the deal, voicing concerns about its likelihood to hurt the overall level of competition across the gaming industry. In light of Microsoft’s substantial market prospects—largely rooted in its ownership of the Xbox ecosystem—any additional strengthening of its position would likely be detrimental to both “current and future” gamers, the CMA posited. The regulator suggestedremovingCall of Dutyfrom Activision Blizzard’s Microsoft acquisition portfolioas a possible solution for alleviating those concerns.
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In a subsequent note to investors, Wedbush analysts Michael Pachter and Nick McKay dismissed the CMA’s proposed remedies as frivolous, arguing that their unrealistic nature is a clear “signal” that Microsoft’s acquisition of Activision Blizzard is on the verge of going through. Not only is the UK aware it has a “losing legal argument” against the deal, but so is its US counterpart, the Federal Trade Commission, as per the same source. TheFTC sued to block Microsoft’s Activision Blizzard takeoverin late 2022, but Pachter and McKay interpreted that move as nothing more than a wishful gamble to extract some concessions from the two companies before the deal is inevitably cleared by the courts.
The Wedbush analysts believe that same line of reasoning led the UK antitrust watchdog to voice concerns about the consolidation. Between the CMA’s inherently unrealistic recommendations and the fact that the FTC has yet to propose any legal remedies despite suing to block the transaction, it’s clear that neither regulator will be able to mount meaningful opposition to the deal, McKay and Pachter concluded.
The newly published note to investors did not reflect on theEuropean Union’s objections to Microsoft’s Activision Blizzard purchase. However, out of all the regulatory roadblocks that the deal is facing around the world, the EU scrutiny it attracted never posed a substantial threat to its completion. In fact, Microsoft was already said to be preparing an EU concession package as early as November 2022.
The company’s proposed acquisition of Activision Blizzard already won approvals from antitrust authorities in Saudi Arabia, Serbia, Brazil, and Chile.Microsoftremains adamant it will complete the transaction by May 2023.
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