By: Sara Warner (Mills & Reeve)
When Microsoft Corporation (Microsoft) unveiled its intention to acquire Activision Blizzard, Inc. (Activision) in January 2022, the prospect of regulatory scrutiny loomed on the horizon. However, the unfolding regulatory saga, persisting in the US and concluding recently in the UK, has proven to be a prolonged and intricate process. Nearly two years later, the UK’s primary competition regulator, the Competition and Markets Authority (CMA), has granted clearance for a modified version of the initial deal. This decision follows the European Commission’s (EC) clearance of the deal on May 15, 2023, subject to certain conditions. Meanwhile, the pursuit of clearance continues in the US.
The acquisition raises apprehensions about Microsoft’s potential dominance in cloud gaming, where games are streamed on-demand from remote servers, and its potential impact on the evolving cloud gaming market. In this article, we briefly explore the implications of the clearance decisions in the UK/EU for the future of cloud gaming. Additionally, we highlight key considerations that companies across various sectors should keep in mind when contemplating mergers and acquisitions (M&A) activities.
The Ascendance of Cloud Gaming: The concept of cloud gaming, utilizing remote servers to stream games to users’ devices without the need for local hardware or game installations, has existed for over two decades. Dependent on reliable, high-speed internet connections, recent advancements in internet speed and reliability have propelled the popularity of cloud gaming. With a surge in demand, the cloud gaming market is projected to experience substantial growth in the coming years. Key players in this arena include Microsoft (which launched Xbox Cloud Gaming, formerly known as Project xCloud, in September 2020), Amazon, Google, Intel, Nintendo, Nvidia, Sony, Tencent, and Ubisoft…