Microsoft Activision-Blizzard Deal Will Pass Provided More Concessions Are Being Offered, DFC Believes
The highly-debated Microsoft Activision-Blizzard deal will still pass, provided Microsoft makes more concessions to appease the CMA.
At least, that's what industry research firm DFC Intelligence believes after the UK regulator decided to block the deal as the regulator believes that the $69 billion megadeal will harm the long-term competition in the emerging cloud gaming market.
Last week, the CMA blocked the merger between Microsoft and Activision-Blizzard. Following earlier provisional reports, Microsoft signed various 10-year deals with cloud-serving gaming providers, including EE, Ubitus, Boosteroid, and NVIDIA. These long-term deals, however, weren't enough to convince the UK regulator that the transaction wouldn't hurt the competition in the cloud gaming market. "We have therefore concluded that combining Activision’s strong portfolio of games with Microsoft’s current multiple cloud gaming strengths would enable Microsoft to harm current and emerging cloud gaming competitors by withholding Activision games from them and, unlike in the case of consoles, we have not found that there are any material reasons to stop it doing this", the final report from the CMA reads.
Following this decision, Microsoft came out hard and called out the UK Prime Minister Rishi Sunak to look hard at the CMA. In addition, both Microsoft and Activision-Blizzard have said that the CMA's decision will be appealed. Whether this appeal will succeed remains unknown, but the procedure surely isn't an easy one.
So is this controversial deal doomed? The DFC believes it isn't, but in order to have the deal pass, additional compromises will have to be made, and the question is - how far is Microsoft willing to go to get this deal approved?
"DFC now believes that the CMA may require Microsoft to offer more than it is willing to give", the research firm writes in a new article. "There is a growing danger that Microsoft will walk away from the purchase."
The firm adds, "DFC Intelligence believes the deal will go through provided Microsoft is willing to make some more concessions to appease regulators. But at what point does compromising eliminate the strategic objectives for making the acquisition in the first place?"
"A remedy acceptable to the CMA would probably limit Microsoft’s ability to use Game Pass as an entry to other services. There will be some point where Microsoft will walk away versus compromising."
In the final part of the article, the DFC writes that this will be a drawn-out battle for Microsoft, and a decision about the merger and possible additional concessions isn't to be expected before 2024. "However, if Microsoft decides to drop the acquisition that could happen sooner, the DFC ends its article."
Source: Wccftech
