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Microsoft’s Activision Blizzard deal gets global scrutiny

Microsoft’s Activision Blizzard deal gets global scrutiny

The $68.7 billion acquisition of Activision Blizzard by Microsoft might have a significant impact on the gaming industry by turning the creator of the Xbox into something like to Netflix for video games by giving it ownership over a large number of more well-known games.

However, in order to advance, Microsoft must first withstand a torrent of government investigations from New Zealand to Brazil as well as from American regulators who have been given more latitude by President Joe Biden to tighten up their enforcement of antitrust laws.

Only Saudi Arabia has confirmed its approval of the transaction more than seven months after Microsoft first announced it, but a decision by the United Kingdom to end or intensify its antitrust investigation might be a portent of things to come. On Thursday, a decision is anticipated.

William Kovacic, a former chairman of the five-member U.S. Federal Trade Commission, said that “a increasing number of nations are subjecting big international transactions to tighter examination.” Many of the jurisdictions exercising such scrutiny are substantial economies and shouldn’t be dismissed, according to the author.

Microsoft has already been the target of antitrust investigations, most notably more than 20 years ago when a federal court ordered the company’s dissolution as a result of the firm’s anticompetitive practices in relation to its dominating Windows software. On appeal, the court reversed that decision, but it also imposed additional, less severe sanctions on the corporation.

Microsoft, however, has generally avoided the more severe regulatory reaction that Big Tech competitors like Amazon, Google, and Facebook’s parent corporation Meta have seen in recent years. However, the Activision Blizzard merger has garnered international interest because of its sheer scale.

The all-cash transaction will likely be the biggest in the history of the technology sector. It would give Microsoft, the company behind the Xbox gaming system and console, authority over well-known game properties including Candy Crush, World of Warcraft, and Call of Duty. Additionally, there is a growing perception that previous assessment of Big Tech mergers was too light, such as when Facebook acquired WhatsApp and Instagram in 2014 and 2012.

Collectively, Kovacic said, “it implies the types of sacrifices you’re going to have to make become more challenging.”

Sony, the manufacturer of the PlayStation gaming device that competes with Microsoft’s Xbox, has expressed special concern about the idea of Microsoft acquiring ownership of Call of Duty. Sony stressed Call of Duty as a “important” game in a letter to Brazilian authorities; the company said that even if a rival had the funds, it would be hard to create a competitive product.

A deal where Microsoft guarantees that rival console manufacturers Sony or Nintendo won’t be shut off from popular Activision Blizzard titles is one possible approach. Microsoft has previously said publicly that it is amenable to the idea.

In response to Sony, Microsoft pledged to make Activision games like Call of Duty “available on PlayStation beyond the existing agreement and into the future,” according to Microsoft President Brad Smith. However, many are unsure of how long these commitments would hold true in the absence of regulatory consent decrees.

However, Microsoft’s standing in Washington has improved significantly since 2000. On topics like data privacy, it is “considered as more rational and logical,” according to Kovacic.

Beginning with a labor organization that has been attempting to organize Activision Blizzard workers, Microsoft has been attempting to win over doubters in the United States. Democratic senators have also voiced worry about claims that Activision has a hostile working environment for women, which allegedly led to employee walkouts last year and discrimination complaints filed by federal and California civil rights authorities.

The US Department of Justice, the FTC, and state attorneys general were urged to exercise more control of the merger in a call by the Communications Workers of America in March. However, the union informed the FTC in a letter dated June 30 that it had changed its position and was now in favor of the agreement since Microsoft had promised to “guarantee the employees of Activision Blizzard have a clear route to collective bargaining.”

Despite Microsoft’s attempts to depict itself and Activision Blizzard as “minor participants in a highly fragmented publishing industry,” the company’s business in gaming is expanding, according to a document submitted to New Zealand’s Commerce Commission.

Microsoft paid ZeniMax Media, the parent company of Bethesda Softworks, the developer of the well-known video games The Elder Scrolls, Doom, and Fallout, $7.5 billion in 2021 to purchase ZeniMax Media. After purchasing Swedish game firm Mojang for $2.5 billion in 2014, Microsoft also acquired the popular game Minecraft.

Specifically from Activision Blizzard’s King business, which creates Candy Crush, the Redmond, Washington-based tech giant claims that the gaming purchases would help bolster its Xbox Game Pass game subscription service and its mobile capabilities.

Rami Ismail, a Dutch game developer, said that Microsoft’s subscription-based service has so far proven advantageous for smaller game companies attempting to reach people with their material. He is dubious about the merger’s long-term effects, however.

According to Ismail, “Xbox Game Pass as a product has been incredibly excellent in getting financed for unusual, creative games that may not have the typical market reach to be successful.” On the other hand, there is less of a motivation to do something similar as power consolidates.

Competitors of Microsoft are also merging. Bungie Inc., creator of the well-known gaming title Destiny and the original developer of Xbox-owned Halo, was purchased by Sony in July for $3.6 billion. In May, Take-Two Interactive, the firm behind Grand Theft Auto and Red Dead Redemption, concluded a $12.7 billion agreement to buy FarmVille and Words With Friends creator Zynga.