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Microsoft’s acquisition of Activision Blizzard faces regulatory scrutiny

By Aiden Crawford

LOS ANGELES, CA - JUNE 15: Microsoft Vice President and head of 343 Industries Bonnie Ross introduces "Halo 5 Guardians" during the Microsoft Xbox E3 press conference at the Galen Center on June 15, 2015 in Los Angeles, California. The Microsoft press conference is held in conjunction with the annual Electronic Entertainment Expo (E3) which focuses on gaming systems and interactive entertainment, featuring introductions to new products and technologies. (Photo by Christian Petersen/Getty Images)
LOS ANGELES, CA - JUNE 15: Microsoft Vice President and head of 343 Industries Bonnie Ross introduces "Halo 5 Guardians" during the Microsoft Xbox E3 press conference at the Galen Center on June 15, 2015 in Los Angeles, California. The Microsoft press conference is held in conjunction with the annual Electronic Entertainment Expo (E3) which focuses on gaming systems and interactive entertainment, featuring introductions to new products and technologies. (Photo by Christian Petersen/Getty Images) /
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Microsoft’s attempt to acquire Activision Blizzard, one of the biggest acquisitions in history, has attracted regulatory scrutiny, including a lawsuit from the US government’s Federal Trade Commission (FTC). The FTC is concerned that the deal, valued at $68.7 billion, could create a scenario where Microsoft could “suppress” competition in console and cloud gaming. An evidentiary hearing is set for August 2, 2023, while the UK’s Competition & Markets Authority is expected to deliver its final decision by April 26, 2023.

Microsoft is no stranger to legal battles with the US government. In the landmark case of United States vs. Microsoft, the government claimed Microsoft operated a monopoly in the PC space, making it difficult for people to use non-Microsoft products on their computers. Microsoft eventually settled with the US and agreed to some remedies.

However, in the case of Activision Blizzard, the FTC claims that Microsoft’s acquisition could harm competition in the gaming industry, especially in the console and cloud gaming markets. The FTC aims to protect competition and has been soliciting feedback from all market participants, including “big players.” Still, the FTC will ultimately make independent judgments based on the law and facts.

Meanwhile, in the UK, the Competition & Markets Authority has already provisionally concluded that Microsoft’s efforts in the console space are not likely to be anti-competitive. However, the authority has expressed concerns over the cloud gaming market. The CMA’s final decision will be made by April 26, 2023.

It remains to be seen whether Microsoft will reach a settlement and agree to remedies with the FTC to finalize the acquisition. The case is still pending, and there is no official word yet. As Microsoft aims to expand its gaming empire, the outcome of this acquisition could have significant ramifications for the gaming industry as a whole.

Another possible effect of this acquisition could be changes in the way that Activision Blizzard games are released and distributed. Microsoft has been moving towards a model where its first-party games are released on Xbox Game Pass, a subscription service that allows players to access a large library of games for a monthly fee. If Activision Blizzard were to adopt this model for its games, it could potentially reduce revenue from traditional game sales but increase revenue from subscriptions.

There is also the possibility that Microsoft could use Activision Blizzard’s IP to drive sales of other products, such as its cloud gaming service, Xbox Cloud Gaming. Activision Blizzard has a large portfolio of successful game franchises, such as Call of Duty and World of Warcraft, that could be used to attract new customers to Microsoft’s cloud gaming platform.

However, it remains to be seen how Microsoft will handle the regulatory scrutiny that this acquisition is currently facing. The United States government’s Federal Trade Commission has filed a lawsuit to block the deal, claiming that it could harm competition in the video game industry. The UK’s Competition & Markets Authority is also reviewing the acquisition.

If the acquisition is approved, it would be one of the largest in history and would significantly impact the games industry. Microsoft would become a major player in the industry, with a large portfolio of successful game franchises and increased leverage in negotiations with platform holders and developers. The effects of this acquisition could be felt for years to come.

Furthermore, the acquisition could also have implications for the wider gaming industry, as it could prompt other major tech companies to make similar moves in an effort to gain a larger stake in the lucrative gaming market. This could lead to further consolidation within the industry, with larger companies acquiring smaller studios and publishers to increase their market share and strengthen their offerings.

In addition, the acquisition could also have implications for consumers, as it could lead to a reduction in competition and potentially result in higher prices for games and services. It remains to be seen how regulators will ultimately rule on the deal and what impact it will have on the industry as a whole, but it is clear that this acquisition is one of the most significant developments in the history of the gaming industry and will be closely watched by all stakeholders.

Microsoft’s attempt to acquire Activision Blizzard is a major move that could have far-reaching implications for the gaming industry. The regulatory scrutiny it is currently facing highlights the potential challenges of consolidating such a large share of the market, but the potential benefits for Microsoft and the wider industry could be significant. As the acquisition process unfolds, it will be interesting to see how other companies respond and what the long-term impact will be on the gaming landscape.

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