Microsoft’s $68.7bn acquisition of video game maker Activision Blizzard has closed after the deal’s final big hurdle – approval from the UK’s Competition and Markets Authority (CMA) – was secured. 

The merger – the largest ever in the gaming industry – closed last Friday (13 October), the same day the CMA officially gave its blessing to the deal after Microsoft agreed to sell streaming rights for Activision’s games in a concession the regulator described as “a game changer”. 

Weil Gotshal & Manges acted as Microsoft’s global antitrust counsel on the matter while Skadden Arps Slate Meagher & Flom and Simpson Thacher & Bartlett acted as deal counsel to Activision Blizzard and Microsoft respectively. 

The merger’s completion represents a major win for Microsoft president Brad Smith, previously chief legal officer of the company, who has steered it through a maze of regulatory obstacles since it was first announced back in January last year. 

The CMA had prohibited the deal in April 2023, citing concerns that Microsoft would withhold access to Activision games – which include popular franchises such as Candy Crush and Call of Duty – from cloud gaming rivals post-acquisition. 

Microsoft appealed the CMA’s decision before the UK Competition Appeal Tribunal, but before the appeal reached a hearing the company submitted a restructured merger proposal to the CMA that would see it divest the cloud streaming rights to Activision’s games outside the EEA to France’s Ubisoft Entertainment.  

The CMA found in September that the divestment to Ubisoft “substantively addressed” its concerns, with the regulator clearing the merger last Friday after Microsoft addressed “a limited set of residual concerns”. 

The European Commission had raised similar concerns to the CMA in terms of the impact of the merger on cloud gaming rivals, but gave the deal conditional approval in May 2023 on the basis that Microsoft met certain conditions including a free licence for EEA consumers that would allow them to stream Activision games. 

However the deal still faces opposition in the US from the Federal Trade Commission (FTC). The regulator challenged the merger in administrative court and then requested a preliminary injunction in federal court, but was dealt a blow when the judge rejected its claim there was a risk that Microsoft could harm competition by withholding Activision content from rivals and denied the request. 

The FTC has an argument scheduled before an appeals court in December and said last Friday that it remained focused on that appeal, though according to a report in Reuters analysts believe the impact of its challenge will be limited to “incremental concessions”. 

Weil said it had steered the merger through review processes in 17 jurisdictions worldwide.

“Working with local counsel, the firm has also gained approval for the merger in Brazil, Chile, China, Japan, New Zealand, Saudi Arabia, Serbia, South Africa, South Korea, Taiwan, Turkey and Ukraine,” it said. 

The Weil team was led by Washington DC antitrust partners Michael Moiseyev and Megan Granger, London antitrust partner Jenine Hulsmann, Brussels antitrust partner Niklas Maydell and London litigation partner Jamie Maples. The team also included counsel Chris Chapman, Nafees Saeed, Annagiulia Zanazzo and a supporting cast of associates. 

The firm said it worked closely with Wilkinson Stekloff, lead trial counsel, in the federal court FTC proceeding.

The Skadden team that advised Santa Monica-based Activision included M&A partners Kenton King, Sonia Nijjar and Christopher Bors (all Palo Alto); antitrust/competition partners Steven Sunshine (Washington DC), Bill Batchelor (Brussels and London), Maria Raptis (New York) and Julia York (Washington DC); tax partner Nathan Giesselman (Palo Alto); labour and employment law partner Annie Villanueva Jeffers (New York and Palo Alto); executive compensation and benefits counsel Kristin Davis (Palo Alto); and IP and technology partner Ken Kumayama (Palo Alto).

Meantime Simpson Thacher’s New York-based team consisted of M&A partners Alan Klein, Anthony Vernace and William Allen, tax partner Jonathan Goldestein, executive compensation and benefits partner Greg Grogan, IP partner Lori Lesser and litigation partner Brooke Cucinella. 

Palo Alto-based capital markets partner Bill Bretani and Washington DC-based regulatory partners Abram Ellis and Mick Tuesley also advised on the transaction. 

The deal marks Microsoft’s largest acquisition yet, skyrocketing past the $26bn it paid to acquire LinkedIn in 2016. It makes Microsoft the world’s third-largest gaming company by revenue, behind Tencent and Sony.