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Why are some wary of the Microsoft and Activision Blizzard deal? What does it mean for the future of Activision?
Microsoft can proceed with a $69 billion deal to purchase video game publisher Activision Blizzard—the largest such deal in gaming history. Some members of the gaming community share the FTC’s concerns, while those in favor of the merger say this is an opportunity for Microsoft to improve Activision.
Below we’ll take a look at the ruling and what it means for the future.
Microsoft Acquires Activision Blizzard
Microsoft won a court case on July 11, 2023, allowing it to proceed with plans to buy video game publishing giant Activision Blizzard. With this victory, the companies can finalize the $69 billion Microsoft and Activision deal, which was originally announced in January 2022.
The Federal Trade Commission (FTC) had tried to block this purchase, citing antitrust laws—the agency argued that such a merger would give Microsoft too much influence in the gaming industry, with the potential to reduce competition and harm consumers.
However, District Judge Jacqueline Corley ruled in Microsoft’s favor, saying the FTC had failed to show that this deal would lessen competition in the gaming market. The FTC requested the deal be paused while it appeals the judge’s decision, but that motion was denied.
What Does the Ruling Mean for Microsoft?
According to Microsoft, this merger will make it the world’s third-largest gaming company, behind only Tencent and Sony.
Perhaps the most significant benefit for Microsoft will be in the mobile gaming market. Mobile gaming has gone from a niche market to an industry worth over $100 billion annually. However, it’s a market that Microsoft has struggled to break into; by acquiring Activision and its subsidiaries, Microsoft will instantly go from a nonentity to a mobile gaming powerhouse.
A Fresh Start for Activision?
While some gamers share the FTC’s concerns about the upcoming merger, others see it as a chance for Microsoft to fix Activision’s damaged reputation in the video gaming community.
First and foremost, in the last few years, Activision Blizzard has been slammed with numerous complaints, allegations, and lawsuits regarding its company culture. The company has been accused of fostering a sexist “frat boy” environment, where female employees regularly suffer discrimination and sexual harassment. Gamers hope that Microsoft—a company with a positive reputation—will make some much-needed changes after taking over Activision.
Ongoing Legal Challenges
Despite failing to block the deal between Microsoft and Activision, the FTC intends to hold its own in-house hearing in August regarding the merger, which could result in further lawsuits and penalties for Microsoft. Notably, this is not the first time the FTC has accused Microsoft of violating antitrust laws. In fact, in the 1990s the FTC won a case that nearly resulted in Microsoft being divided into two entities—although Microsoft appealed and eventually overturned that decision.
The final potential challenge comes from Microsoft and Activision themselves: Their deal was set to expire on July 18, after which either company could walk away without penalty unless they negotiate an extension. However, they appeared on track to close the deal; both companies remain enthusiastic about it, and both companies saw their stock prices jump after District Judge Corley’s ruling.
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