How Microsoft’s $69 billion Activision deal works

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How Microsoft’s $69 billion Activision deal works

According to Reuters, Microsoft is expected to receive approval from the European Union's antitrust regulators for its $69 billion acquisition of Activision after offering licensing deals to competitors.

The move is expected to help Microsoft overcome a major hurdle in its quest to take on industry leaders Tencent and Sony in the growing video gaming market.

Microsoft announced its largest-ever acquisition in January 2022, the Activision bid. The EU Commission is expected to make a decision on the deal by April 25, and the people familiar with the matter say that the commission is not expected to demand Microsoft sell assets to win its approval.

The company may have to offer behavioural remedies to address the concerns of parties other than Sony. The remedies related to the merged entity are usually related to the future conduct of the entity. Activision shares jumped 1.8 per cent in pre-market trading after Reuters published the story and were up 2.6 per cent in late trading.

Microsoft President Brad Smith said that the company is willing to offer licensing deals to address antitrust concerns, but it won't sell Activision's lucrative Call of Duty franchise. Smith has argued that it is not realistic to carve out one game or one part of Activision from the rest.

Microsoft has stated that it is committed to providing effective and easy-to-use solutions that address the concerns of the European Commission. A company spokeswoman told Reuters that Microsoft's commitment to giving long-term equal access to Call of Duty to Sony, Steam, NVIDIA, and others preserves the deal's benefits to gamers and developers and increases competition in the market. Microsoft announced last month that it had signed 10 year licensing deals with Nintendo and Nvidia to bring Call of Duty to their gaming platforms, with the agreements conditional on regulatory approval for the Activision deal.

The country's competition agency suggested that Microsoft divest Call of Duty in the UK to address its concerns, as the acquisition faces regulatory challenges in the UK. The US Federal Trade Commission FTC has asked a judge to block the deal.

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