Microsoft is trying to persuade regulators around the world to approve its $68.7 billion acquisition of Activision Blizzard — the biggest deal of its kind the gaming industry has ever seen. Amid concerns about the impact on competition in the industry, and amid passionate lobbying against competitor Sony’s deal, the US Federal Trade Commission has announced it will seek to legally block the deal while UK competition and market authority has also done this expressed skepticism.
Here’s the latest on Microsoft’s plans to buy Activision Blizzard.
Google and Nvidia have reportedly raised concerns about the deal
After BloombergGoogle and Nvidia have both, like Sony, expressed concerns to the FTC about the merger’s potential to stifle competition and strengthened the regulator’s case as it prepares to take them to court in August.
Neither is as direct a competitor to Microsoft in gaming as Sony is, but both have some overlap. Nvidia’s main business is making graphics cards, but it also has a streaming service, GeForce Now, which is perhaps its closest competitor to Microsoft’s cloud gaming initiative. (GeForce Now doesn’t appear to be carrying any major Activision Blizzard games at this time.) Nvidia is reportedly not directly opposed to the deal, but did stress the need for open and equal access to Activision Blizzard’s games.
Google’s own streaming service, Stadia, is about to be shut down. But the company has keen interest in mobile gaming through its Google Play Store and Android operating system, and in acquiring mobile giant King (Candy Crush) as part of the Activision-Blizzard deal, Microsoft is becoming a much bigger player in this space. Most likely, his complaint is just one tech giant trying to curb someone else’s influence.
Microsoft hopes to bring its pro-union approach to Activision Blizzard
It’s Jan 6, as reported by The VergeMicrosoft ran an ad in the Washington Post highlighting its acceptance of unions, co-signed by the Communication Workers of America union. “As we enter a new year, we remain committed to creating the best possible jobs for people who make a living in the technology sector. When both employees and management bring their voices to the negotiating table, employees, shareholders and customers benefit equally,” the statement said. Then it adds: “Throughout 2023, we hope to bring Activision Blizzard the same agreement and principles that Microsoft has proposed to adopt.”
This is certainly a pitch to the FTC that Microsoft can improve working conditions at Activision Blizzard, which has shown opposition to unionizing its employees following the horrific scandal surrounding its workplace culture in 2021. The ad highlights the successful unionization of 300 Bethesda and ZeniMax employees following Microsoft’s acquisition of that company and concludes, “We are not asking the FTC to ignore competition concerns. On the contrary, we believe it’s important to explore solutions that protect competition and consumers, while fostering the needs of workers, economic growth and American innovation.”
Microsoft admits it was wrong to call the FTC “unconstitutional.”
While trying to smooth things over with a skeptical, not to say hostile, regulator, Microsoft has retracted one of its most inflammatory claims in its response to the FTC’s lawsuit seeking to block the merger. According to Axioson January 5, Microsoft revised its filing to remove a claim that the FTC’s structure violated the United States Constitution.
“The FTC has an important mission to protect competition and consumers, and we quickly updated our response to omit language suggesting otherwise based on the Constitution,” said David Cuddy, Microsoft public affairs spokesman. to Axios. “We initially put all sorts of arguments on the table internally and should have dropped that defense before filing. We value feedback on these mitigations and are reaching out directly to those who have raised concerns to make our position clear.” In other words, sorry, we know that was wrong, we screwed up .
FTC says it’s not in “substantive” negotiations with Microsoft
Tuesday, January 3 saw the first pretrial hearing in the FTC’s lawsuit seeking to block the merger. At this point, said FTC attorney James Weingarten that the Commission has approved settlement talks with Microsoft, but that “there are currently no substantive discussions.”
That sounds like bad news for Microsoft, but “substantial” is the keyword here. The two sides are undoubtedly in touch and Microsoft will almost certainly make a settlement offer – these days the tech giant is known for taking a collaborative approach with governments and regulators and will be keen to finalize the deal ahead of its bid for Activision Blizzard will expire in July 2023. The test phase itself is not scheduled to begin until August.
UK regulators say they need more time to investigate the deal
On January 5, the UK’s Competition and Markets Authority – which along with the FTC and the European Commission is one of three regulators believed powerful enough to block the deal outright – said it would take more time to complete the so-called “second phase” of its deeper review of the deal.
The CMA originally hoped to complete its deliberations by March 1, but has pushed back that deadline to April 26. However, she says she intends to complete them before that date. The CMA has said it is “concerned” about the deal and seems quite influenced by Sony’s lobbying so far. However, in a public consultationit found that the majority of responses to the deal (aside from the 500 that “contained abusive content (without other substantive content) or were blank, incomprehensible, allegedly from consumers outside the UK, or not in English.”
Chile approves the takeover
On December 29, 2022, Chile’s National Economic Prosecutor’s Office became the latest international regulator to approve the deal. It said it didn’t think the deal would significantly reduce competition, and it didn’t think it likely Microsoft would remove Call of Duty from other platforms, including PlayStation (a concern that was at the heart of Sony’s objections to the deal ).
Here is a list of all the countries that have approved Microsoft’s acquisition of Activision Blizzard so far:
- Chile
- Brazil
- Saudi Arabia
- Serbia
What happens next?
The next important deadline is the judgment of the European Commission, which is due to be announced on or before March 23.
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