Oct 13, 2023 - Technology

Microsoft finally closes deal to buy Activision Blizzard

Image announcing Microsoft Activision deal

Microsoft is finally closing its $69 billion purchase of Activision Blizzard, 633 days after announcing its bid.

Why it matters: The deal is the biggest acquisition in Microsoft's history, and the biggest ever in the games industry.

  • It's also the outcome of months of lobbying and deal tweaking by the $2 trillion tech giant in the face of skepticism from regulators in the U.S., U.K. and E.U.

State of play: U.K. regulators said on Friday morning that they approved of an altered version of the deal, which will involve French mega-publisher Ubisoft purchasing control of cloud gaming rights to Activision Blizzard's current and upcoming console and PC games.

Details: The companies announced the deal hours after getting the green light from U.K. regulators.

  • Microsoft swiftly rolled out a video montage of its gaming characters and Activision's Call of Duty cast, set to Rodgers and Hammerstein's "Oh, What a Beautiful Mornin'."
  • Activision Blizzard CEO Bobby Kotick said in a memo to employees that he would remain in his position, reporting to Microsoft gaming chief Phil Spencer, through the end of 2023.

The U.K.s Competition and Markets Authority had blocked the deal in the spring over concerns Microsoft could substantially lessen competition in the unproven cloud gaming market, in which players access a game via a remote server as they would a Netflix movie that's streamed from afar.

  • E.U. officials had approved the merger in the spring, while the U.S. Federal Trade Commission continues to challenge it in court, though without the power to block it from closing.

Details: The purchase will bolster Microsoft's already large 23-studio gaming division with control of Activision Blizzard's three massive gaming divisions which employ around 13,000 people.

  • Activision's collection of studios primarily develop the popular first-person shooter military series Call of Duty, which even in a recent off year, was the second-best-selling game in the U.S.
  • Blizzard produces long-running massively multiplayer game World of Warcraft as well as the Diablo and Overwatch series.
  • King operates Candy Crush Saga, one of the top mobile games of the last decade.

Be smart: The deal should bolster Microsoft's gaming operation, which is in distant third place in the game console market, behind Nintendo's Switch and Sony's PlayStation 5.

  • Microsoft has spent recent years presenting itself not just as a game-maker and console-seller but as a service-provider through its all-you-can-play Xbox Game Pass subscription service. It is expected to add Activision Blizzard games to that service, though Activision has said the next Call of Duty won't go there right away.

Between the lines: The path to a closed deal has had its obstacles for Microsoft, but nothing its ample resources couldn't overcome.

  • In the spring of 2021, it satisfied brewing concerns over the deal's impact on Activision Blizzard's workforce by agreeing to an unprecedented labor neutrality pact with the Communication Workers of America. Since then, Microsoft voluntarily recognized a union formed by about 300 game testers at its ZeniMax studios, the first union.

Microsoft also overcame its chief gaming rival Sony's objections, which were central to the FTC's failed attempt to secure a preliminary injunction against the deal this summer. Sony has since signed a deal with Microsoft to ensure Call of Duty will remain on its PlayStation console for another decade.

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