Microsoft has made significant progress in its bid to acquire Activision Blizzard, as a US judge approved the $69 billion deal and a British regulator signaled a possible reconsideration of its opposition. The news has sent Activision shares soaring by 10%, marking this as Microsoft’s largest deal to date and the biggest transaction in the videogame industry’s history. Microsoft shares have also seen a boost, rising to $332.47.
In San Francisco, US District Judge Jacqueline Scott Corley dismissed the Biden administration’s concerns that the merger would harm consumers by giving Microsoft exclusive access to popular games like “Call of Duty.” Meanwhile, the Competition and Markets Authority (CMA) in Britain expressed willingness to review Microsoft’s proposals to address antitrust issues, indicating the potential for a resolution.
Joost Van Dreunen, a lecturer at New York University’s Stern School of Business, stated that the testimonies presented during the US trial have weakened the arguments of the UK’s antitrust watchdog. The US Federal Trade Commission (FTC) argued that Microsoft’s ownership of Activision games would disadvantage rival console makers such as Nintendo and Sony Group. However, Judge Corley disagreed, stating that the FTC had not demonstrated sufficient evidence to suggest that the merger would lead to a significant reduction in competition.
The FTC has until Friday to appeal the judge’s decision, with spokesperson Douglas Farrar expressing disappointment and emphasizing the threat that the merger poses to competition in cloud gaming, subscription services, and consoles. It is expected that the FTC will announce its next steps soon.
The focus now turns to the UK decision, as the gaming market is projected to grow by 36% over the next four years. The outcome of this case represents a setback for the Biden administration’s broader efforts to reduce costs for consumers, which includes negotiations to lower the price of insulin medication and eliminate unnecessary fees in airline tickets.
Microsoft President Brad Smith expressed gratitude for the swift and thorough decision, highlighting the company’s commitment to addressing the concerns raised by the CMA. Analysts believe that Microsoft and the CMA could potentially reach a resolution in the coming weeks.
While much attention has been given to “Call of Duty” during the trial, Activision also produces other highly successful games such as “World of Warcraft,” “Diablo,” and “Candy Crush Saga.” The FTC’s complaint focused on potential competition loss in console gaming, subscriptions, and cloud gaming. As a response to address these concerns, Microsoft has agreed to license “Call of Duty” to competitors, including a 10-year contract with Nintendo, subject to the completion of the merger.
During the trial in June, Microsoft CEO Satya Nadella argued that the company has no incentive to exclude rivals like Sony’s PlayStation in order to promote their own Xbox consoles.
In summary, Microsoft’s acquisition of Activision Blizzard has overcome significant obstacles with the approval from the US judge, and there is potential for a resolution with the UK regulator. The impact on competition and consumer costs remains a key concern, but Microsoft has shown a willingness to address these issues. The outcome of this high-profile deal will have broad implications for the videogame industry and may set a precedent for future mergers and acquisitions.
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Eugen Boglaru is an AI aficionado covering the fascinating and rapidly advancing field of Artificial Intelligence. From machine learning breakthroughs to ethical considerations, Eugen provides readers with a deep dive into the world of AI, demystifying complex concepts and exploring the transformative impact of intelligent technologies.
