After one year, eight months, and 26 days, Xbox has finally completed its acquisition of Activision Blizzard, meaning it now owns premium video game franchises including Call of Duty, Overwatch, and Diablo.
Microsoft announced its intention to buy Activision Blizzard on January 18, 2022 but unlike its relatively smooth acquisitions of studios like Starfield and Fallout maker Bethesda, the historic $68.7 billion deal was almost brought to a halt several times.
The deal seemed doomed at times, with the United States' Federal Trade Commission (FTC), European Union, and UK's Competitions and Markets Authority (CMA) all bearing down on Xbox and Activision Blizzard. The pair emerged successful, however, as the deal was finally closed on October 13, 2023.
IGN has outlined every challenge faced by Microsoft and Activision Blizzard below, providing a complete history of the deal and how they finally managed to push it through.
First Concerns Raised by U.S. Senators
The first in a long line of concerns surrounding the Activision Blizzard acquisition arrived on April 1, 2022 as four U.S. senators including Bernie Sanders wrote a letter to the Federal Trade Commission (FTC) challenging consolidation in the tech industry.
Sanders alongside Elizabeth Warren, Cory Booker, and Sheldon Whitehouse, wrote they were "deeply concerned" about the deal's impact on workers. The senators referenced the wave of sexual harassment and other allegations issued against Activision Blizzard, saying the acquisition could "further disenfranchise these workers and prevent their voices from being heard."
The letter continued: "The FTC should assess whether the ways in which these companies have failed to protect the rights and dignity of their workers are driven by monopsony power or amount to anticompetitive harms in our labour market, and if so, if the merger will exacerbate these problems."
Wall Street Questions Viability Despite Shareholder Approval
What could have been a strong step forward for the deal only raised more questions as, on April 28, 2022, 98% of Activision Blizzard shareholders voted to approve the company's acquisition by Microsoft.
The deal was approved at $95 a share, but shareholders grew concerned as this number had been slowly lowering at the time to the low $80 range and as low as $75.60 on April 29. This was interpreted by some as a lack of shareholder confidence around the deal's ability to ultimately pass.
Despite dipping further towards the end of the year, however, and encountering some other ups and downs, share prices began steadily rising again as of May 2023.
UK's Competitions and Markets Authority Launches Investigation
What would become the biggest hurdle for Microsoft and Activision Blizzard to overcome began on July 6, 2022 as the UK government's Competitions and Markets Authority (CMA) announced an investigation into the deal.
Responsible for ensuring fair competition between businesses in the UK, the CMA said it intended to "consider whether the deal could harm competition and lead to worse outcomes for consumers", citing concerns around high prices, lower quality products, and reduced choice.
Microsoft maintained confidence in the face of the investigation, saying it expected and thought it appropriate the deal should be scrutinised by regulators. "We have been clear about how we plan to run our gaming business and why we believe the deal will benefit gamers, developers, and the industry," Microsoft corporate vice president and general counsel Liza Tanzi told IGN at the time.
Call of Duty Becomes the Centre of Debates
As an Activision Blizzard game and the most popular release each year, Call of Duty quickly became the centre of conversations surrounding the deal. While questions were raised from day one, and Microsoft and Sony threw accusations and condemnations towards each other fairly regularly, actual possibilities surrounding exclusivity only emerged later.
On September 1, 2022 as the CMA recommended a second phase investigation into the deal, Microsoft said Xbox Game Pass would receive new Call of Duty games day one, but this wouldn't impact their launch on PlayStation. Talks between the console competitors began behind the scenes too, with Xbox allegedly offering to bring Call of Duty to PlayStation for three years beyond the current contract.
PlayStation CEO Jim Ryan raised an issue with the plan a few days later on September 7, however, calling Microsoft's proposition an "inadequate" solution on "so many levels". Ryan highlighted the impact on gamers, saying he and Sony "want to guarantee PlayStation gamers continue to have the highest quality Call of Duty experience, and Microsoft’s proposal undermines this principle."
CMA Raises More Concerns as Xbox and PlayStation Squabble
An update from the CMA on October 12, 2022 raised several areas in which the competition regulator had concerns over the deal. "There is a realistic prospect of a substantial lessening of competition in gaming consoles, multi-game subscription services, and cloud gaming services," the regulator said.
The increased scrutiny from the CMA triggered a wave of new arguments from both Xbox and PlayStation, as the former tried desperately to see the deal through and the latter sought to block it. This led to many unusual statements over the next couple of months from Microsoft in particular.
Xbox essentially called PlayStation too big to fail, for example. "While Sony may not welcome increased competition, it has the ability to adapt and compete," it said, adding that Xbox has a "number of significant disadvantages" in streaming. Microsoft president and vice chairman Brad Smith also said Xbox's acquisition of Activision Blizzard was fair because PlayStation has significantly more exclusive games.
Looking to put the Call of Duty argument to bed (though it continued for several more months), Xbox boss Phil Spencer said on October 31 the company would continue to release the shooter on PlayStation "as long as there's a PlayStation out there to ship to". This was followed by an offer from Xbox on November 11 to keep Call of Duty on Sony's consoles for ten years alongside similar commitments to Nintendo.
The Federal Trade Commission Enters the Fray
In what appeared at the time to be the biggest hurdle for Microsoft at the time, the United States' Federal Trade Commission sued to block Xbox's acquisition of Activision Blizzard. In a statement, the agency said Xbox would "gain control of top video game franchises" and therefore "harm competition in high-performance gaming consoles and subscriptions services by denying or degrading rivals’ access to its popular content."
The FTC pointed to Microsoft's history of acquisitions and making those games exclusives, like it did with Bethesda and games including Starfield and Redfall. Xbox again remained confident, however, with Microsoft president Brad Smith saying it will "continue to believe that [its] deal to acquire Activision Blizzard will expand competition and create more opportunities for gamers and game developers".
Activision CEO Bobby Kotick chimed in too. "This sounds alarming, so I want to reinforce my confidence that this deal will close," he said in an internal memo delivered to employees.
European Union Issues Antitrust Warning
The European Union became the latest government body to target the deal on February 3, 2023 when it issued a formal antitrust warning to Microsoft. The statement of objections was not made public but the EU had previously raised concerns over the exclusivity of Call of Duty.
Microsoft said it was still committed to "finding a path forward" for the deal. "We are listening carefully to the European Commission's concerns and are confident we can address them," a spokesperson said at the time.
CMA's Provisional Report Says Deal Could Harm Gamers
Just days after the European Union issued its antitrust warning, the CMA delivered a blow of its own by stating the Microsoft and Activision Blizzard deal could harm gamers. Outlined in its provisional report on February 8 the CMA reiterated several previously mentioned complaints alongside the impact on cloud gaming.
It noted that Microsoft already accounts for 60% to 70% of this market, and adding the likes of Call of Duty to their current Cloud offerings in an exclusive manner could "alter the future of gaming" and potentially harm UK gamers.
Microsoft and Activision responded to the claims, with the former promising again that it will bring Call of Duty to other platforms. "When we say equal, we mean equal. Ten years of parity. On content. On pricing. On features. On quality. On playability," Microsoft added.
Activision also remained hopeful about its ability to convince the CMA of the deal's consequences. "These are provisional findings, which means the CMA sets forth its concerns in writing, and both parties have a chance to respond," it said. Putting its money where its mouth is, Microsoft signed a ten year deal with Nintendo to bring Call of Duty to its platforms on February 21.
CMA Blocks Microsoft's Acquisition of Activision Blizzard
Though things seemed to be going a little better for Microsoft on March 24, 2023, when the CMA announced it was now less concerned about the Activision Blizzard deal going through, the competition regulator surprised the industry when it moved to block the deal on April 26.
Its official verdict came without PlayStation's complaints or Call of Duty exclusivity at the forefront, however, as cloud gaming instead emerged as the main reason for blocking the acquisition. "The deal would alter the future of the fast-growing cloud gaming market, leading to reduced innovation and less choice for UK gamers over the years to come," the CMA said.
It added that Microsoft failed to provide a solution to its concerns over the deal's impact on the cloud gaming market.
Microsoft retaliated by saying it would appeal the decision, saying it is "disappointed" by the result that "appears to reflect a flawed understanding of this market". Microsoft president Brad Smith spoke out against the CMA the following day, saying "people's confidence in technology in the UK has been severely shaken".
European Commission Approves Deal
Microsoft's acquisition of Activision Blizzard was approved by the European Commission (EC) on May 15 with a verdict that directly countered that of the CMA's. Though it reached similar conclusions — that the deal would not harm the console market but could harm cloud gaming — the EC was satisfied with Microsoft's proposed remedies for these concerns.
"The commitments [offered by Microsoft] fully address the competition concerns identified by the Commission and represent a significant improvement for cloud gaming as compared to the current situation," said the EC's statement.
Addressing its concerns that the deal going through would monopolise the sector, Microsoft offered a 10-year licensing commitment for consumers in the European Economic Area. This commitment guarantees that Activision Blizzard games will not be locked to Game Pass Ultimate or the Xbox Cloud Gaming platform.
Microsoft versus the Federal Trade Commission
Following a five day court battle with the FTC, Xbox's acquisition of Activision Blizzard finally got a win as Judge Jacqueline Scott Corley ruled in favour of Microsoft. "Microsoft’s acquisition of Activision has been described as the largest in tech history," Judge Corley said on July 11.
"It deserves scrutiny. That scrutiny has paid off: Microsoft has committed in writing, in public, and in court to keep Call of Duty on PlayStation for ten years on parity with Xbox. It made an agreement with Nintendo to bring Call of Duty to Switch. And it entered several agreements to for the first time bring Activision’s content to several cloud gaming services."
The trial brought forward several stories of its own, including Microsoft's next generation plans and an admission it has "lost the console wars", among other statements it would likely rather keep quiet. The FTC wasn't happy with the verdict, of course, and immediately filed an appeal challenging the verdict.
Looking to Overcome the CMA
Microsoft's win against the FTC seemingly gave the deal new legs as both Xbox and Activision Blizzard quickly moved to address the CMA. The deal was being approved by other regulators across the world too, including China, New Zealand, and Japan, essentially leaving the UK as the final hurdle to overcome.
Microsoft had submitted its appeal in May, but the UK's Competition Appeal Tribunal (CAT) later paused it on July 17 to allow both parties more time to negotiate. Microsoft and Activision meanwhile postponed the merger deadline by three months, moving from July 18 to October 18.
"The recent decision in the U.S. and approvals in 40 countries all validate that the deal is good for competition, players, and the future of gaming," said Activision Blizzard CCO and executive vice president of corporate affairs Cheng Meservey.
A month later, on August 22, 2023, Microsoft submitted a new deal for review with the CMA. It restructured the deal to buy a “narrower” set of rights, which included signing a deal with Assassin’s Creed maker Ubisoft to sell the cloud streaming rights for all current and new Activision Blizzard PC and console games released over the next 15 years (excluding the European Economic Area).
Crossing the Final Regulatory Hurdle
Microsoft's nearly two year pursuit of Activision Blizzard was finally completed on October 13, 2023 as the CMA finally cleared the deal. The CMA framed its decision as a victory for the preservation of competitive prices and better services in cloud gaming.
"In August this year Microsoft made a concession that would see Ubisoft, instead of Microsoft, buy Activision’s cloud gaming rights," the CMA said. "This new deal will put the cloud streaming rights (outside the European Economic Area) for all of Activision’s PC and console content produced over the next 15 years in the hands of a strong and independent competitor with ambitious plans to offer new ways of accessing that content."
Anticipation built across the industry as stock in Activision Blizzard was halted overnight, and Microsoft finally announced that its acquisition of Activision Blizzard, the largest in video game history, was now complete.
"We love gaming. We play games, create games, and know first-hand how much gaming means to all of us as individuals and collectively, as a community," Xbox boss Phil Spencer said.
"And today, we officially welcome Activision Blizzard and their teams to Xbox. They are the publishers of some of the most played and most beloved franchises in gaming history across console, PC and mobile. From Pitfall to Call of Duty, World of Warcraft to Overwatch, Candy Crush Saga to Farm Heroes Super Saga, their studios have pushed the boundaries of gaming for players around the world."
Ryan Dinsdale is an IGN freelance reporter. He'll talk about The Witcher all day.
