After a winding road of regulatory challenges, Microsoft today closed its $69 billion acquisition of Activision Blizzard, creating a video game behemoth.

While Microsoft has always been an acquisitive company, the deal for Activision Blizzard is its biggest, and is the largest M&A deal since AOL bought Time Warner more than two decades ago. Not only did Microsoft’s move trigger antitrust scrutiny in many parts of the world, but it occurred as Activision Blizzard was taking steps to address widespread allegations of sexual misconduct and harassment within its ranks.

Microsoft has been a successful player in the video game console business through Xbox, but Activision Blizzard unites it with one of the top game publishers in the sector, one known for blockbuster franchises like Call of Duty.

The closing of the transaction is a welcome sign for media dealmakers, who have grown nervous watching the actions of late by the FTC, FCC and other agencies. The merger had initially been announced in January 2022, in a decidedly different climate.

The announcement of the close of the deal came just a few hours after the UK’s top competition watchdog signaled its approval.

“The new deal will stop Microsoft from locking up competition in cloud gaming as this market takes off, preserving competitive prices and services for UK cloud gaming customers,” the Competition and Markets Authority said.

Microsoft expressed gratitude for the “ thorough review and decision,” maintaining that the combination of the companies “will benefit players and the gaming industry worldwide,” in the words of President Brad Smith.

Microsoft was challenged on several fronts as it tries to close the transaction. That included a lawsuit in the United States, where the Federal Trade Commission sought a court order to block the deal. A judge, however, resoundingly sided with Microsoft and Activision Blizzard and, although the government has appealed the decision, the companies still moved to close the transaction.

The FTC also is moving forward with an administrative proceeding on the transaction.

An FTC spokesperson said, “We remain focused on the federal appeal process despite Microsoft and Activision closing their deal in advance of a scheduled December appeals court hearing. Microsoft and Activision’s new agreement with Ubisoft presents a whole new facet to the merger that will affect American consumers, which the FTC will assess as part of its ongoing administrative proceeding. The FTC continues to believe this deal is a threat to competition.”   

In August, Microsoft said the Ubisoft would buy Activision’s cloud gaming rights.

The government’s loss in the Microsoft-Activision Blizzard case underscores the challenge that Joe Biden’s administration has as it tries to more aggressively challenge mergers and acquisitions due to antitrust and competition concerns. Courts have been much more skeptical of such a posture, given the case law, while congressional efforts to update antitrust laws have been sidelined.

A Justice Department challenge to Google’s dominance in search engines is currently playing out in a trial in federal court in Washington. Last week, the government put on the stand one of its highest profile witnesses: Satya Nadella, the CEO of Microsoft, who has nevertheless defended the Activision Blizzard deal.

Ted Johnson contributed to this report.


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