Microsoft's Activision Blizzard deal is under scrutiny worldwide

By MATT O’BRIEN and KELVIN CHAN, AP Technology Writers

Microsoft’s plan to buy video game giant Activision Blizzard for $68.7 billion could have major implications for the games industry, turning the Xbox maker into something like a Netflix for video games by giving it control over much more. popular titles.

But to reach the next level, Microsoft must first survive a barrage of government inquiries from New Zealand to Brazil and from US regulators encouraged by President Joe Biden to strengthen their antitrust enforcement.

More than seven months after Microsoft announced the deal, only Saudi Arabia has announced its approval, though an imminent decision by the United Kingdom to close or escalate its antitrust investigation could indicate what’s to come. That decision is expected on Thursday.

“A growing number of countries are scrutinizing major global transactions in depth,” said William Kovacic, former chairman of the five-member US Federal Trade Commission. “Many of the jurisdictions that exercise that oversight are major economies and cannot be brushed aside.”

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Microsoft has faced antitrust investigations before, most notably more than two decades ago when a federal judge ordered its dissolution following the company’s anticompetitive actions regarding its dominant Windows software. That verdict was overturned on appeal, although the court imposed other, less drastic penalties on the company.

In recent years, however, Microsoft has largely escaped the more intense regulatory backlash endured by its Big Tech rivals, such as Amazon, Google and Facebook’s parent company Meta. But the sheer size of the Activision Blizzard merger has attracted worldwide attention.

The cash deal will be the largest in tech industry history. It would give Microsoft, maker of the Xbox console and game system, control over popular game franchises such as Call of Duty, World of Warcraft and Candy Crush. There’s also a growing sense that past reviews of Big Tech mergers have been too lax — like when Facebook bought Instagram in 2012 and WhatsApp in 2014.

Collectively, that means the kind of concessions you have to make become more difficult,” Kovacic said.

Sony, the maker of the PlayStation console that competes with Microsoft’s Xbox, is particularly concerned about the possibility of Microsoft taking control of Call of Duty. In a letter to Brazilian regulators, Sony highlighted Call of Duty as an “essential” game — a blockbuster so popular and ingrained that it would be impossible for a competitor to develop a competitive product, even if they had the budget. to do that.

One solution could be a settlement in which Microsoft agrees to ensure that console-making rivals like Sony or Nintendo are not cut off from popular Activision Blizzard games. Microsoft has already publicly stated that it is open to that concept.

Microsoft’s president Brad Smith has said the company has committed to Sony to make Activision games like Call of Duty “available on PlayStation outside of the existing agreement and going forward” — though many are skeptical about how long those games will last. promises would last if they weren’t set in legal consent decrees.

On the other hand, Microsoft also has a much better reputation in Washington than it was in 2000. It is “seen as more reasonable and sensible” when it comes to data privacy, Kovacic said.

Microsoft has also worked to win over skeptics in the US, starting with a union trying to organize Activision Blizzard employees. Democratic lawmakers have also raised concerns about allegations of Activision’s toxic work culture for women, which led to worker strikes last year and discrimination lawsuits filed by California and federal civil rights enforcers.

In March, the Communications Workers of America had called for closer oversight of the deal from the US Department of Justice, the FTC and the attorneys general. But a June 30 letter from the union to the FTC said it had moved to support the deal after Microsoft agreed “to ensure Activision Blizzard employees have a clear path to collective bargaining.”

Gaming represents a growing part of Microsoft’s business, despite the company’s efforts to portray itself and Activision Blizzard as “small players in a highly fragmented publishing space,” according to a document filed with the New Zealand Commerce Commission.

In 2021, Microsoft will spend $7.5 billion to acquire ZeniMax Media, the parent company of video game publisher Bethesda Softworks, which is behind the popular video games The Elder Scrolls, Doom and Fallout. Microsoft’s assets also include the popular game Minecraft after it bought Swedish game studio Mojang in 2014 for $2.5 billion.

The Redmond, Washington-based tech giant has said the gaming acquisitions will bolster its Xbox Game Pass game subscription service and its mobile offerings, particularly from Activision Blizzard’s King division, which makes Candy Crush.

Dutch game developer Rami Ismail said Microsoft’s subscription-based service has so far been positive for smaller game studios trying to get their content to users. But he is unsure about the long-term effects of the merger.

“Xbox Game Pass as a product has been really good at funding interesting, creative games that may not have the normal market reach to be successful,” Ismail said. “On the other hand, as power consolidates, there’s less incentive to do something like that.”

Microsoft rivals are also consolidating. Sony signed a $3.6 billion deal in July to purchase Bungie Inc., maker of the popular game franchise Destiny and the original developer of Halo, owned by Xbox. Take-Two Interactive, maker of Grand Theft Auto and Red Dead Redemption, closed a $12.7 billion deal in May to acquire mobile gaming company Zynga, maker of FarmVille and Words With Friends.

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