Activision could pull out of UK in order to merge with Microsoft

Microsoft and Activision may be ready to take drastic measures in order to merge and become one of the biggest powerhouses in the video games industry.

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Microsoft is currently looking at ways to carry on with its $68.7 billion Activision merger without the United Kingdom’s approval. The megaton merger was blocked by the UK’s Competition and Markets Authority, and with the merger’s July 24 deadline fast approaching, it’s possible that Microsoft and Activision could “close over” and proceed with the merger despite the CMA block.

There are already plans underway to close the deal in the United States despite the FTC’s current administrative lawsuit. The FTC would need an injunction from a federal court in order to get the merger blocked, and this could be challenging as the merger has already been approved in the European Union for similar reasons as the FTC’s anti-competitive objections.

One potential path forward would be to have Activision remove its video games operations from the United Kingdom and instead sell its games, content, and services through a distributor in the country.

Data indicates that Activision Blizzard King generated around $828 million in revenues from the United Kingdom in 2022, and it is unknown how much of the company’s total UK earnings would be affected with this potential indirect business arrangement.

Activision would have to make this kind of deal itself and would need to be prepared for any potential revenue hits and policy changes throughout its business.

Bloomberg reports that Microsoft President Brad Smith plans to meet with UK regulators at the Competition and Markets Authority (CMA) to discuss the merger. While in the UK, Smith is also expected to visit treasury head Chancellor Jeremy Hunt to discuss the deal.

As per Reuters, UK Chancellor Hunt had previously spoken about the merger in a conference:

“One of the reasons that companies like Microsoft and Google want to invest in the UK is because we have independent regulators that aren’t controlled by politicians. I would not want to undermine that at all, but I do think it’s important all our regulators understand their wider responsibilities for economic growth.”

The report of these dramatic actions comes shortly after Microsoft President Brad Smith asserted that the company was working to find solutions with regulators in order to get the merger passed.

In a recent interview with CNN’s First Move’s Julia Chatterley, Microsoft President Brad Smith said:

“Fundamentally, we have an acquisition that will bring more competition and more access to games to consumers on a global basis. That’s why we now have approval from almost 40 countries with more than 2 billion people for this to proceed.

“There are some regulators that have expressed concerns. And we get it, we want to address those concerns. I’m encouraged that we were able to have a solution for the European Union that lets the acquisition go forward with guardrails to ensure that everyone gets access to these games for all kinds of cloud game streaming services, and not Microsoft alone.

“Now obviously we have not yet succeeded in addressing every concern of every regulator, but at the end of the day you have to decide: do you want to find a solution to every problem, or do you want to find a problem with every solution.

“We are focused on finding a solution to every problem, because I believe solutions are there. You can count on us to want to be creative, to want to be constructive, and frankly to be determined to keep working to find a solution that will get the good out of this and then make those benefits available to everybody.”