After a wait of nearly two years since its initial announcement of the deal, Microsoft finally acquired Activision Blizzard for $68.7 billion on October 13, 2023 after receiving a nod from the U.K. regulators. This acquisition is likely Microsoft’s strategy to boost its product Xbox Game Pass, which is a membership-based service. However, the deal went through a lot of hardships including an insider trading investigation, wrongdoing accusations from multiple New York City funds and concerns from Senators. The biggest hurdles were set forth by the United States’ Federal Trade Commission (FTC) and the Competition and Markets Authority of the United Kingdom.
The FTC was established under the Federal Trade Commission Act with a mission to protect “the public from deceptive or unfair business practices and from unfair methods of competition through law enforcement, advocacy, research, and education.” The FTC blocked Microsoft from acquiring Activision Blizzard on December 8, 2022 alleging that the deal would provide Microsoft with undue advantage which would lead to the suppression of competitors. The FTC believed that if Microsoft acquired Activision, it would be able to manipulate Activision’s pricing, Activision’s game quality, and player experience on rival consoles and gaming services. The FTC alleged that Microsoft would even be able to change the terms of Activision’s content which could result in harm to consumers. Finally on July 11, 2023, Judge Jacqueline Scott Corley ruled in favor of Microsoft and found that there was not a substantial likelihood that the Microsoft-Activision deal would lessen competition. On the contrary, the court found that Microsoft’s arguments provided evidence that consumers will have more access to Call of Duty after the deal. Microsoft committed in writing, in public, and in court to keep Call of Duty on PlayStation, which is owned by Sony, for the next ten years maintaining the quality of the game exactly how it will be available on Xbox to ensure fair competition.
The Competition and Markets Authority (“CMA”) of the United Kingdom raised additional issues for Microsoft. CMA is a watchdog organization that ensures that consumers in the UK are not subject to malpractices such as monopolization and that there is no unfair competition in the economy. On July 6, 2022 an inquiry, for ensuring fair competition among businesses in the UK, was initiated by CMA. CMA stated in a press release that it speculated that the Microsoft-Activision deal could be harmful to its rivals, both current and future, by hampering access to Activision’s games. Finally on October 13, 2023, CMA granted Microsoft consent to acquire Activision with the condition that the sale of Activision’s cloud streaming rights shall terminate prior to the acquisition which was proposed in the first proposed merger.
As a result of these orders and decisions, Microsoft was able to acquire Activision Blizzard for a whopping amount of $68.7 billion on October 13, 2023, making it the biggest deal in the history of the gaming industry. This deal will open new gates for Microsoft in the gaming industry with it becoming the third largest gaming company, in terms of global revenue, after Tencent and Sony. Microsoft now has access to multi-dollar IPs of Activision and is expected to become a key player in the esports market. The significant advantage that Microsoft gains through this deal is the reduced time-to-market with new gaming products. It will be able to expand into the market at a fast pace after acquiring Activision. Microsoft now has a strong position to change the gaming industry in the upcoming years.