July 12, 2023, 12:12 pm | Read time: 4 minutes
At the beginning of 2022, Microsoft announced plans to acquire game publisher Activision Blizzard for $69 billion. It would be the largest deal in gaming history, but regulatory authorities are divided on its implementation.
In May, the EU approved the multibillion-dollar acquisition of video game maker Activision Blizzard by Microsoft. Previously, the UK’s Competition and Markets Authority (CMA) blocked the acquisition despite numerous concessions. Only a decision in the lawsuit by the U.S. Federal Trade Commission (FTC) is still pending.
Preliminary Injunction Failed in Court
As early as the end of 2022, the FTC filed a lawsuit against the acquisition. However, the first hearing will not take place until August 2023. In the meantime, the agency sought a preliminary injunction and restraining order from a U.S. federal district court. According to the FTC complaint, this was necessary “because Microsoft and Activision have stated that they can complete the planned acquisition at any time.”
U.S. Judge Jacqueline Scott Corley found that the FTC could not sufficiently demonstrate that the acquisition would harm competition. The agency has until Friday to appeal the ruling.
Meanwhile, the British regulatory authority CMA has shown a willingness to negotiate in light of the current ruling. CMA and Microsoft have agreed to pause their legal disputes to negotiate. The company is now examining what changes could be made to address the authority’s concerns.
While the CMA sees the issue primarily in cloud gaming competition, the FTC has a different view. According to them, the deal could create a monopoly in the markets for game subscription services, high-end consoles, and cloud gaming.
Sony, the global market leader in game consoles, also wants to prevent the acquisition of Activision by Microsoft. With the same goal, private video game users in the U.S. have filed a lawsuit. The video game industry associations EGDF and Uni, however, have spoken in favor of the merger.
Microsoft’s Concessions Sufficient for EU
The European Union has given the green light to the largest acquisition in the video game industry to date. The software giant Microsoft may acquire Activision Blizzard under certain conditions, the EU competition authority announced on Monday. The news agency Reuters reported on this last week thanks to insider information.
The authority described the long-term licensing agreements offered by Microsoft for Activision’s hit games like “Call of Duty” as sufficient. “They represent a significant improvement compared to the current situation.” Before the EU, Brazil, Chile, Serbia, and Saudi Arabia had approved the Activision deal.
The Biggest Legal Battles in Tech History
Microsoft Raises Prices: Xbox and Game Pass to Become Significantly More Expensive
CMA Sees Cloud Gaming Market at Risk
The British competition watchdogs find the concessions insufficient. The $69 billion deal would harm competition in the rapidly growing cloud gaming market, the CMA explained in a press release on Wednesday. Microsoft would gain control over key offerings like “Call of Duty,” “Overwatch,” and “World of Warcraft.”
The measures offered by the U.S. company could not allay the antitrust watchdogs’ concerns. Microsoft announced plans to appeal the decision, arguing it is based on a misunderstanding of the market and how cloud technology works. Activision’s shares fell by more than ten percent following the decision. “We will reassess our growth plans for the United Kingdom,” the video game maker announced.
Microsoft Intends to Continue Supporting Other Platforms
To address antitrust concerns, Microsoft President Brad Smith offered competitors licenses for Activision’s bestseller “Call of Duty.” However, Smith ruled out breaking up the video game maker Activision or selling “Call of Duty”: “It is not realistic to separate a game or parts of the company.”
Microsoft has already signed ten-year contracts with Nintendo and Nvidia for the use of the “Call of Duty” franchise on their gaming platforms. However, these are contingent on approval of the Activision acquisition. Additionally, the company licenses this game to other online video game providers. Sony had rejected a similar offer.
Microsoft competes with its “Xbox” gaming console against the world leader Sony’s “PlayStation” and, to some extent, with Nintendo’s “Switch.” Critics fear that the U.S. company may not release popular Activision games like “World of Warcraft” or “Guitar Hero” for its Japanese rivals after the acquisition.
Microsoft aims to expand its market position in the booming video game market and establish a foothold in the “Metaverse.” This involves virtual 3D worlds seen as the future of the internet.
With material from Reuters