Microsoft and Activision Blizzard have renegotiated the deadline for concluding the proposed acquisition of the Call of Duty publisher, giving them more leeway to conclude the discussions with market regulators with a new deadline to complete by 18th October 2023.
As originally planned, the deadline was originally yesterday, 18th July, which Microsoft and Activision had clearly believed gave them a reasonable amount of time (18 months) to pass through regulator scrutiny. Without closing the deal – whether through legal holdups or Microsoft changing their mind without a good enough reason – the Xbox maker would owe Activision $3 billion for the trouble. This would be recompense for the impact it would have on the publisher’s stock price.
“We’re optimistic about getting this done,” Xbox boss Phil Spencer said when announcing the new deadline.
Now there are multiple penalty stages, as revealed by Microsoft vice chair and president Brad Smith. If they don’t close by 29th August, Microsoft will owe a termination fee of $3.5bn, which will increase to $4.5bn if they don’t close by 15th September. However, that termination fee will only apply if the deal completely falls apart.
All of this has dragged out far longer than anyone would have hoped, with Microsoft originally announcing their intention to acquire Activision Blizzard in January 2022, giving themselves 18 months within that original agreement. Since then Microsoft has campaigned for regulator approval, making various pledges to bring Call of Duty to more platforms, to preserve feature parity on PlayStation, and to bring their games to rival game streaming platforms.
The only regulators to really kick up a fuss have been the US Federal Trade Commision and the UK Competition and Market Agency. The CMA announced that they were blocking the deal back in April, which Microsoft swiftly appealed at the time. Meanwhile, the FTC took them to court and, after making a poor case of it, failed to get a preliminary injunction, and then again to appeal that failure.
Off the back of that, Microsoft and the CMA agreed to halt their own upcoming court battle and come back to negotiating table. This will lead to another six week review, with the final conclusions due by 29th August. With Sony now giving in and signing a deal that will keep Call of Duty on PlayStation for the next ten years, Microsoft is finding new things that they can show to the CMA as mitigation for any impact this has to the games market.
Thankfully, it looks like this story is rolling toward its conclusion. It’s all become very boring, hasn’t it?