Microsoft Finalizes Acquisition of Activision Blizzard for $69 Billion

October 14, 2023

Recently, Microsoft successfully concluded its $69 billion acquisition of the video game behemoth, Activision Blizzard, marking the largest consumer tech acquisition since AOL acquired Time Warner over two decades ago. The purchase, which had faced regulatory hurdles in the UK and the US, underscores the continued ability of tech industry giants to utilize their substantial cash reserves for expansion.

Regulatory Hurdles Overcome

Microsoft’s acquisition of Activision Blizzard gained final approval from British regulators on Friday, marking the resolution of the last remaining regulatory hurdle. The completion of this acquisition signifies that despite years of global scrutiny of big tech companies by governments, it hasn’t significantly curbed their power, growth, or their capacity to pursue large-scale deals.

A Blueprint for Tech Giants

The Microsoft-Activision deal may set a precedent for other tech giants on how to navigate regulatory scrutiny effectively. This acquisition is a testament to the tech industry’s resilience in the face of regulatory challenges.

Challenges to Big Tech

Governments worldwide have been actively scrutinizing big tech companies, including Microsoft, Google, Apple, Amazon, and Meta (formerly Facebook). The Federal Trade Commission (FTC) attempted to halt Meta’s acquisition of a virtual reality fitness game start-up, while the Justice Department sued a health tech company acquisition, alleging it would provide a major insurer with competitive data.

However, most regulatory challenges have not led to significant victories against digital platforms dominating online commerce. Cases against tech companies, including Google and Meta, are still ongoing.

Microsoft’s Strategic Approach

Microsoft carefully navigated the acquisition process, securing approval from numerous countries. To address concerns, they agreed to continue offering access to Activision’s flagship franchise, “Call of Duty,” on platforms from other companies, like Nintendo and Sony.

In the UK, the Competition and Markets Authority initially blocked the deal but later reversed its decision when Microsoft agreed to license a portion of Activision’s business related to cloud gaming, a promising sector for the industry.

The Potential Impact

The acquisition could reshape competition in the video game industry. Microsoft’s presence in mobile gaming will be significantly bolstered by Activision’s King division, which produces the popular mobile game, “Candy Crush.” Microsoft also gains access to lucrative titles like “Call of Duty,” which has generated over $30 billion in lifetime revenue, and other popular franchises like “Diablo” and “World of Warcraft.”

The company intends to offer these games on its Xbox Game Pass, a subscription service with over 25 million subscribers. Activision’s games are expected to be available on Game Pass in the near future. Microsoft’s long-term strategy revolves around growing Game Pass and achieving profitability as its subscriber base increases.

Concerns and Future of the Acquisition

Microsoft still faces regulatory challenges, as the FTC has an ongoing case regarding the acquisition. If the FTC succeeds, Microsoft can appeal in various federal courts, including the one that previously ruled in favor of the company. This legal process could span several years.

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