HOW MICROSOFT REVIVED ITS DEAL TO BUY ACTIVISION

The software giant outmanoeuvred regulators to shift its fortunes in the $69 billion deal to buy Activision Blizzard

- Leah Nylen, Dina Bass, & Katharine Gemmell

If Microsoft Corp completes its acquisition of Activision Blizzard in the coming months, the $69 billion deal will go down as one of the biggest comeback stories in the history of mergers.

By this past April, the gaming industry’s biggest acquisition ever appeared doomed. US regulators had filed a challenge to the takeover and their counterparts in the UK had blocked it outright.

But Microsoft resurrected the purchase earlier this summer, deploying what amounted to a bluff that pitted US and UK regulators against each another. And on Tuesday, the UK agreed to open a fresh probe of the transaction, following an offer from Microsoft to sell the cloud rights of current and future Activision games released over the next 15 years to Ubisoft Entertainment SA.

If the transaction clears the UK’s new probe, it could solidify Microsoft’s status as the third-biggest player in the gaming world and signal a major defeat for ambitious competition regulators in the US and the UK. This account of how Microsoft outmanoeuvred regulators to shift its fortunes is based on interviews with more than a dozen company executives, advisers and competitor enforcers.

Microsoft first announced the acquisition in early 2022. Trouble arrived in December 2022 when regulators in the US filed an administrative challenge to the deal. Then, in April 2023, UK antitrust enforcers at the Competition and Markets Authority (CMA), led by Sarah Cardell, blocked the takeover outright, saying it threatened competition in the multi-billion-dollar gaming market. The US Federal Trade Commission, led by Lina Khan, scheduled a trial for August, weeks after Microsoft’s deadline to close the acquisition or be subject to a $3 billion breakup fee.