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Τετάρτη, 6 Δεκεμβρίου, 2023
ΑρχικήEnglish EditionWhy the Microsoft-Activision deal is at a halt

Why the Microsoft-Activision deal is at a halt

By Erika Koutroumpa,

Teamwork makes the dream work’, as the popular catchphrase goes, and multimillion dollar companies are perhaps those who know it best. Through Mergers and Acquisitions (M&A), already powerful players in the industry can join forces and expand their reach and profits. So, based on this logic, it makes really no surprise that Microsoft announced their intentions to acquire gaming company Activision early last year. Yet, over a year and a half later and the deal, which was expected to be the biggest one in the history of the gaming industry, still has not taken place. 

Activision is an American video game publishing company based in Santa Monica, and with a revenue of 8.803 billion USD (2021), it is one of the largest electronic game publishers worldwide. As the first ever independent third-party console video game developer, it boasts an extensive Intellectual Property (IP) library, including lucrative projects such as Call of Duty, Overwatch and Diablo. From 1997-2008 it made 25 acquisitions of smaller companies and in 2008 it merged with French company Vivendi Games, hence getting the rights to popular franchise world of warcraft.  

So why would Microsoft be interested in acquiring Activision? Microsoft is a tech giant, owning major tele informatic systems such as outlook, communications platform Skype, document processors such as Word and Powerpoint, the widely used computer software Windows and gaming console Xbox. Currently, it is the most valuable publicly traded company in the world since 2018 and has been criticized in the past for monopolistic practices. Furthermore, the Xbox subsidiary is comprised of 23 game-developing companies and currently owns the rights for major game franchises such as Age of Empires and Minecraft. However, the console not as popular as other mainstream competitors and they are currently on the process of building a cloud subscription platform called Xbox Game Pass Streaming. Obtaining access to Activision’s current IP portfolio would benefit the mogul both with gaining more relevance on the department of electronic games but could potentially help Microsoft with further establishing its online gaming platforms and Windows software. If this theoretical scenario expanded to an extreme level, this could cause a monopoly, something that Microsoft has been accused of in the past.  

 Microsoft announced its intentions to pursue the acquisition of Activision in January 2022, when the metaverse trend was at its peak. The original deadline for the completion of the procedure was July 18th 2023, however due to a series of ongoing technical difficulties this was currently not feasible and an extension for early October has been agreed on. So far, the deal has been approved from the antitrust mechanisms of 40 countries, including Japan, China, South Korea, the EU, and the USA. The deal had been met with controversy between policymakers in most countries, causing multiple investigations to take place across the globe. The FTC in the United States tried to impose a restraining order on Microsoft to stop the deal from taking place, however it was unsuccessful at court proceedings twice. After an investigation, the EU also gave the green light for the procedure to go through, however the UK authority CMA blocked it in April in a surprising turn of events, claiming that this could potentially harm innovation and choice for gamers in the cloud gaming business. For the new entity created by a merger or an acquisition to be able to be active in a certain country, it needs to be approved by their antitrust mechanism. Hence, if the Microsoft Activision deal is not considered as acceptable by the CMA, then the company will not be able to conduct business in UK domain.  

 The EU investigation led to the conclusion that the merger between the two companies Microsoft could not harm rival consoles and rival multi-game subscription services but it could “harm competition in the distribution of games via cloud streaming platforms” and that “its position in market for PC operating systems could be strengthened”. It had also been found that in the EEA, the ratio between PlayStation and Xbox units being sold is 4 to 1 and hence by keeping Activision content exclusive, Microsoft would be at a greater loss. Furthermore, it was also noted that Activision could also strengthen the position of Windows software in the market by degrading the streaming of games in other platforms other than those owned by Microsoft. As a result, it was recommended to supply free license of Activision PC and console games to consumers in the EEA under any cloud platform, hence avoiding any possible negative impact to this new founded branch of the gaming industry. The EU Commission approved of the acquisition after the involved parties agreed to license high-grossing games such as hit franchise Call of Duty to rival platforms.  

Image source: businessbigwigs.com

 The biggest issue according to the CMA is the part of the contract regarding the cloud game streaming services, which are seen by many as the future of gaming distribution. Nevertheless, the system is currently in the early stages of development and the direction that Microsoft may take with this acquisition may make or break its future. A new deal has been proposed where according to Microsoft there are significant differences from its predecessor. The CMA has revealed that under the new deal, Microsoft will not come into possession of the rights for existing PC & console games, or for any new games to come out by Activision for the next 15 years. Instead, third party and fellow French-based video game publisher Ubisoft will get these rights prior to the acquisition. While the deal seems to be more compliant to the CMA guidelines, it has not received the final green light yet.  

To conclude, acquisition of Activision by Microsoft, with its value being placed at 69 billion USD, is set to be significant to the gaming industry. Nevertheless, merging two leading technology companies with an international audience has proved to be no easy feat. Policymakers have to consider not only the antitrust aspect of the deal and its short-term impact, but also the effect it might have in innovation further down the line. Hence, this may cause the question: is the CMA overly cautious or just better at predicting future dilemmas? 

  • “Microsoft makes new bid to unblock Call of Duty deal”, Dearbail Jordan, Daniel Thomas, Steffan Powell, 22 August 2023, BBC News- Business. Available here
  • “Mergers Commission clears acquisition of Activision Blizzard by Microsoft, subject to conditions”, Press Release, European Commission blog, 15 May 2023. Available here
  •  Microsoft’s president on fresh bid for Activision Blizzard: ‘Up to the regulators’ to decide”, Sheila Chiang, 28 August 2023, CNBC Tech. Available here
  • “EU watchdog seeking feedback on Modified Microsoft-Activision deal”, Sophie McEvoy, 13 September 2023 . Available here 
  • “Microsoft’s Activision Blizzard acquisition: What’s the latest?”, Ivan Šimić, 25 August 2023, esports insider. Available here 
  • “Overwatch League teams reportedly begin legal action against activision Blizzard”, Patrick Walker, 19 January 2023, Esports insider.. Available here 
  • “Microsoft and Activision Blizzard restructure proposed acquisition and notify restructured transaction to the UK’s Competition and Markets Authority”, Brad Smith, 21 August 2023, Microsoft Official Webpage. Available here



Erika Koutroumpa
Erika Koutroumpa
She hails from Athens and is a second-year dentistry student at European University Cyprus. Despite studying for a medical subspecialty, her interests include law, economics and politics. During her high school years, she participated in model United Nations conferences, something which contributed to her love of writing and communication of ideas. She likes reading, music and Art.