Microsoft’s Activision Blizzard Deal Under Global Review

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Microsoft’s plan to buy gaming giant Activision Blizzard for $68.7 billion could have major effects on the gaming industry, turning the Xbox maker into something like a Netflix for gaming itself. giving control to many more popular titles.

But to take it to the next level, Microsoft must first survive a deluge of government investigations from New Zealand to Brazil, and US regulators encouraged by President Joe Biden to step up their antitrust enforcement.

More than seven months after Microsoft announced the deal, only Saudi Arabia announced its approval, although an upcoming decision by the UK to shut down or intensify its antitrust investigation could signal what’s to come. This decision is expected on Thursday.

“A growing number of countries are subjecting major global transactions to greater scrutiny,” said William Kovacic, former chairman of the five-member Federal Trade Commission. “Many of the jurisdictions that exercise this control are significant cost savings and cannot be ignored.”

Microsoft has faced antitrust scrutiny before, most notably more than two decades ago when a federal judge ordered its dissolution following the company’s anticompetitive actions related to its dominant Windows software. This verdict was overturned on appeal, although the court imposed other less drastic sanctions on the company.

In recent years, however, Microsoft has largely escaped the more intense regulatory backlash that Big Tech rivals such as Amazon, Google and Facebook parent Meta have endured. But the scale of Activision Blizzard’s merger has caught the world’s attention.

The all-cash deal is expected to be the largest in tech industry history. It would give Microsoft, maker of the Xbox console and gaming system, control of popular game franchises such as Call of Duty, World of Warcraft and Candy Crush. There’s also a growing sense that past scrutiny of Big Tech mergers was too lax, like when Facebook bought Instagram in 2012 and WhatsApp in 2014.

“Collectively, that means the kinds of concessions you’re going to have to make become more difficult,” Kovacic said.

The possibility of Microsoft taking over Call of Duty has been particularly worrisome for Sony, maker of the PlayStation console that competes with Microsoft’s Xbox. In a letter to Brazilian regulators, Sony highlighted Call of Duty as an “essential” game – a blockbuster so popular and entrenched that it would be impossible for a competitor to develop a competing product even if it had the budget to do so.

One solution could be a settlement in which Microsoft agrees to ensure that rival console makers such as Sony or Nintendo won’t be cut off from popular Activision Blizzard games. Microsoft has already publicly signaled its openness to this concept.

Microsoft President Brad Smith says the company has made a commitment to Sony to make Activision games like Call of Duty “available on PlayStation beyond the existing agreement and into the future” – although many be skeptical about the duration of these promises if they are not defined. in the regulatory authorization decrees.

On the other hand, Microsoft also has a much better reputation in Washington than it did in 2000. It’s “considered more reasonable and sensible” on issues such as data privacy, Kovacic said.

Microsoft has also been trying to convince skeptics in the United States, starting with a union that is trying to organize Activision Blizzard employees. Democratic lawmakers have also expressed concern over allegations of Activision’s toxic work culture for women, which led to employee walkouts last year as well as discrimination lawsuits filed by California and the US. federal civil rights officials.

In March, the Communications Workers of America issued a call for stricter oversight of the deal by the US Department of Justice, FTC and state attorneys general. But a June 30 letter from the union to the FTC said it moved to support the deal after Microsoft agreed “to ensure that Activision Blizzard workers have a clear path to collective bargaining.”

Gaming represents a growing share of Microsoft’s business, despite the company’s efforts to portray itself and Activision Blizzard as “small players in a highly fragmented publishing space”, according to a document filed with the Commission. New Zealand trade.

In 2021, Microsoft spent $7.5 billion to acquire ZeniMax Media, the parent company of video game publisher Bethesda Softworks, which is behind popular video games The Elder Scrolls, Doom and Fallout. Microsoft properties also include the hit game Minecraft after buying Swedish game studio Mojang for $2.5 billion in 2014.

The Redmond, Wash., tech giant said game acquisitions will help bolster its Xbox Game Pass game subscription service and mobile offerings, particularly from Activision Blizzard’s King division, which makes Candy Crush. .

Dutch game developer Rami Ismail said Microsoft’s subscription service has so far been a boon for smaller game studios trying to get their content to users. But he is unsure of the long-term impact of the merger.

“Xbox Game Pass as a product has been very successful in funding interesting and creative games that might not have the normal market reach to succeed,” Ismail said. “On the other hand, as power consolidates, there’s less incentive to do something like this.”

Microsoft’s rivals are also consolidating. In July, Sony struck a $3.6 billion deal to buy Bungie Inc., maker of the popular Destiny game franchise and original developer of Xbox-owned Halo. Take-Two Interactive, maker of Grand Theft Auto and Red Dead Redemption, in May reached a $12.7 billion deal to acquire mobile games company Zynga, maker of FarmVille and Words With Friends.

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