Microsoft closes $69 billion deal to buy Call of Duty maker Activision Blizzard after antitrust fights

Microsoft has completed its acquisition of video game-maker Activision Blizzard for $69 billion, closing one of the most expensive tech acquisitions in history that could have repercussions across the video game industry.

The notice that the deal has gone through came seven hours after Microsoft got final approval from Britain’s competition watchdog, which reversed its earlier decision to block the $69 billion gaming deal, removing the last obstacle for the transaction.

Taking over the studios behind blockbuster games like Call of Duty, Diablo and Overwatch will be a boost for Microsoft’s Xbox gaming console, which ranks third in sales behind PlayStation and Nintendo. The software giant also has bigger ambitions to fold Activision titles into its multi-game subscription service that works something like a Netflix for video games.

The nearly 22 months it took to close the deal reflected concerns from rivals and government regulators that Microsoft could use its growing collection of games to lessen competition. It’s part of a broader industry consolidation that also has some independent game developers worried they’ll get sidelined as the industry allocates its resources toward blockbuster franchises with a history of past success.

Microsoft has long defended the deal as good for gaming, saying its goal was to get Activision games to more people on more platforms rather than trying to deprive those games from console-makers such as Sony and Nintendo.

“Players have always been at the center of everything we do. And as we grow, we’ll continue to keep players at the heart of it all,” said a statement Friday from Phil Spencer, CEO of Microsoft’s Xbox division.

He shared a video celebrating the deal, featuring scenes from games to the tune of “Oh, What A Beautiful Mornin’” from the Broadway musical “Oklahoma!”

The blessing from the U.K.’s Competition and Markets Authority was expected after it gave preliminary approval last month to a revamped Microsoft proposal meant to address concerns that the deal would harm competition and hurt gamers, especially in the emerging cloud gaming market where players can avoid buying pricey consoles and stream games to their tablets or phones.

“The new deal will stop Microsoft from locking up competition in cloud gaming as this market takes off, preserving competitive prices and services for UK cloud gaming customers,” the watchdog said.

Microsoft was grateful for the " thorough review and decision” on a tie-up that “will benefit players and the gaming industry worldwide,” President Brad Smith said.

Activision CEO Bobby Kotick says the game maker looks “forward to becoming part of the Xbox Team.”

The deal will benefit gamers and be “productive for the gaming industry as a whole,” said Josh Chapman, managing partner at venture capital firm Konvoy, which invests in video game start-ups.

However, it also tilts the “balance of power significantly” in favor of Microsoft, whose Xbox console has lagged behind Sony’s PlayStation and Nintendo, said George Jijiashvili, senior principal analyst at tech research and advisory firm Omdia.

Microsoft “now has a big opportunity to dictate the future of the games industry,” he said.

Since the deal was announced in January 2022, Microsoft has secured approvals from antitrust authorities covering more than 40 countries. Crucially, it got a thumbs-up from the 27-nation European Union after agreeing to allow users and cloud gaming platforms to stream its titles without paying royalties for 10 years.

But the deal faced resistance from British and American regulators who worried it would stifle competition in the video game industry. Top rival Sony also feared it would limit PlayStation gamers’ access to Call of Duty, Activision’s long-running military shooter series.

The U.S. Federal Trade Commission lost a court bid to pause the deal so that its in-house judge could review it. The FTC hasn’t given up, appealing the decision and last month filing notice of its plan to resume that trial. That signals the U.S. regulator’s intention to unwind the deal even after it closes.

In the meantime, the U.K. regulator was the last major hurdle to the transaction going through. To get its approval, Microsoft will sell off cloud streaming rights outside the EU and three other European countries for all current and new Activision games released over the next 15 years to French game studio Ubisoft Entertainment.

British regulators had initially blocked the transaction over concerns Microsoft could withhold Activision titles from the cloud gaming market. Then, in an unprecedented move, the U.K. watchdog said it needed to reconsider.

One factor was the EU’s approval, granted after Microsoft promised to automatically license Activision titles royalty-free to cloud gaming platforms. Another “material change of circumstance,” according to court documents, was an agreement Microsoft signed with Sony to make Call of Duty available on PlayStation for at least 10 years.

But the regulator still criticized how the deal came together and warned other companies not to use the “tactics employed by Microsoft.”

“Microsoft had the chance to restructure during our initial investigation but instead continued to insist on a package of measures that we told them simply wouldn’t work,” the watchdog’s CEO, Sarah Cardell, said in a statement. “Dragging out proceedings in this way only wastes time and money.”

The U.K. regulator “deserves credit for imposing a structural remedy on Microsoft that is significantly stronger than the weak commitments accepted by the European Commission,” said Max von Thun, director of the Europe office of the Open Markets Institute, a proponent of stronger antitrust enforcement.

But the CMA’s flip-flopping makes the U.K. regulator look “weak and indecisive,” he said.

“Moving forward, there is now a serious risk that in their dealings with the CMA, merging companies and their advisers will no longer take no for an answer,” von Thun said.

Up until now, computer-maker Dell held the record for the priciest tech deal after it bought data-storage company EMC in 2016 for around $60 billion. Microsoft’s own biggest deal was its $26 billion acquisition of professional-networking service LinkedIn around the same time.

Another contender, still pending, is chipmaker Broadcom’s $69 billion plan to buy cloud technology company VMware.

Microsoft valued the Activision deal at $68.7 billion when it announced the acquisition in early 2022, “inclusive of Activision Blizzard’s net cash,” though Microsoft agreed to pay $95 in cash for each share of the game-maker, closer to $75 billion.

Started in 1979 by former Atari Inc. employees, Activision has created or acquired many of the most popular video games, from Pitfall in the 1980s to Guitar Hero and the World of Warcraft franchise. Bobby Kotick has been CEO since 1991, after working with a business partner to buy it from bankruptcy.

One of Activision’s key assets for Microsoft was its King studio, maker of popular mobile games such as Candy Crush Saga.

Microsoft had said when it announced the deal that Kotick will continue to serve as CEO. The Activision business unit would then report to Spencer, who has led Microsoft’s Xbox division since 2014.

While Sony’s PlayStation remains the industry leader, Microsoft in recent years has been scooping up game studios in an effort to drive more gamers to Xbox. Last year, it spent $7.5 billion to acquire ZeniMax Media, the parent company of video game publisher Bethesda Softworks, maker of Elder Scrolls, Fallout and the recently-released Starfield. One of Microsoft’s most popular games, Minecraft, came from its $2.5 billion acquisition of Swedish developer Mojang in 2014.

Rivals have also bought their way to bigger game collections, with Sony venturing near Microsoft’s headquarters to buy Bellevue, Washington-based independent game publisher Bungie Inc. for $3.6 billion last year. Bungie makes the popular game franchise Destiny and was the original developer of Xbox-owned Halo.