Title: Microsoft Clears Major Hurdles as Activision Deal Moves Forward
Date: July 11, 2022
Microsoft’s proposed acquisition of video game maker Activision Blizzard has taken a significant step forward after a U.S. judge and a British regulator signaled their approval of the $69 billion deal. This landmark acquisition would be Microsoft’s largest to date and the biggest in the history of the gaming industry.
Following the news, Activision shares surged by 10%, while Microsoft shares saw a modest increase of 64 cents to $332.47.
U.S. District Judge Jacqueline Scott Corley in San Francisco dismissed the Biden administration’s concerns that the deal would harm consumers by granting Microsoft exclusive access to popular games like “Call of Duty.” The judge stated that the Federal Trade Commission (FTC) had failed to demonstrate that Microsoft’s ownership of Activision content would substantially limit competition in the video game library subscription and cloud gaming markets.
The court has given the FTC until Friday to appeal the decision, but the regulatory body is considering its options. An FTC spokesperson expressed disappointment, highlighting the potential threats to competition in cloud gaming, subscription services, and consoles.
In a separate development, the UK’s Competition and Markets Authority (CMA) indicated it was open to considering Microsoft’s proposals to address antitrust concerns. This suggests that the UK regulator and the tech giant may reach a resolution soon. Testimonies presented during the U.S. trial weakened the CMA’s arguments against the merger, adding to the likelihood of a favorable outcome.
Gaming market sales are predicted to grow by 36% over the next four years, reaching $321 billion. Thus, the acquisition of Activision holds great significance for Microsoft as it seeks to tap into the booming gaming industry.
Microsoft President Brad Smith expressed gratitude for the court’s decision and stated that the company would now focus on addressing the CMA’s concerns. Analysts believe that a deal between Microsoft and the CMA could be reached in the next few weeks.
The FTC’s concerns primarily centered on the potential loss of competition in console gaming, subscriptions, and cloud gaming. Microsoft responded by agreeing to license “Call of Duty” to competitors, including a 10-year contract with Nintendo, contingent on the merger’s completion. Microsoft CEO Satya Nadella emphasized that the company had no motivation to exclude rival platforms, such as Sony’s PlayStation, to boost sales of its Xbox consoles.
As the FTC deliberates its next steps, all eyes remain on the outcome of Microsoft’s proposed acquisition of Activision Blizzard, which could reshape the gaming industry’s landscape.
Reporting by Diane Bartz in Washington; Additional reporting by David Shepardson in Washington and Jaspreet Singh and Aditya Soni and Shivani Tanna in Bengaluru; Writing by Chris Sanders; Editing by Caitlin Webber, Matthew Lewis, David Gregorio, and Muralikumar Anantharaman