Making Sense of Microsoft’s Acquisition of Activision
February 4, 2022
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by Stephen Kanyi

Activisions’s acquisition by Microsoft has been one of the biggest news in the gaming world for the last two weeks. The deal which is said to be around an astonishing $68.7 billion will be the largest acquisition in Microsoft’s history and cement it as the third-largest company in gaming just behind Sony and China’s Tencent.

It is not a done deal yet as there is still a lot of baggage that comes with the acquisition. Part of it is the horrific sexual harassment and discrimination at AcTivision described by Microsoft Gaming CEO Phil Spencer just two months ago. He called it ‘horrific’ and said that Microsoft was “evaluating all aspects” of its relationship with the company.

Despite this and many other ‘obstacles’, the deal is still expected to be completed; any time between July this year and early next year. And once it does go through the effects will be not only felt between the two companies but throughout the video gaming industry.

It will be hard predicting who and how will be affected by this acquisition but here is a look at its implications and how the industry is predicted to react in the coming months.

Navigating Anti-Trust Scrutiny

Before we get ahead of ourselves it is important to reiterate that the deal still faces a lot of hurdles before it is completed. Perhaps the biggest impediment to its completion is scrutiny by the FTC for any breach of anti-trust regulations in the acquisition of one of the largest gaming companies by the world’s second-largest company in market cap.

Microsoft is no stranger to anti-trust criticism. 20 years ago, the company faced perhaps what was the first anti-trust case in the tech world. After surviving a near breakup, the company has since turned around a corner and managed to stay out of the lens of the FTC. This can be down to clever political manoeuvring in the form of lobbyists or just due to the fact that Microsoft is much more enterprise-focused than many of its peers i.e. Google and Apple who deal directly with consumers.

With the AcTivision deal, however, all that is about to change is Microsoft is going to acquire a very large chunk of the videogame market. While the company may have managed to stave off any interest from the FTC and the DOJ for the last 20 years, this deal is going to bring them back into focus.

The deal will make Microsoft the third-largest in the videogame industry and that is definitely going to raise some questions from the authorities. Are they now too big? Is the deal going to be fair for competitors?

Experts however think that Microsoft should face little trouble in completing the deal. Michael Pachter, an analyst in the videogame industry points out that the acquisition won’t make Microsoft’s gaming arm too big to get approval. It will only be 10 to 15 percent.

Zero point zero percent chance that regulators in the US or the EU Competition Commission conclude that this makes them too big with pricing power,” Pachter said in an interview on Vox.

What, however, is the most important question about the deal is the effect it is going to have on AcTivion’s products, the games.

What will Happen to the Games?

With Microsoft already having built their own products in Game Pass a key worry for Activision gamers is whether Microsoft would make some or even all of these games console exclusives. This is a big worry since it had already done that with Starfield and The Elder Scrolls 6.

Spencer was however quick to allay any fears by saying that Microsoft had no immediate plans to take Call of Duty away from PlayStation.

“Had good calls this week with leaders at Sony,” he tweeted. “I confirmed our intention to honour all existing agreements upon acquisition of Activision Blizzard and our desire to keep Call of Duty on PlayStation. Sony is an important part of our industry, and we value our relationship.”

Microsoft did however have more in mind beyond the centrepieces of Activision Blizzard properties extend well beyond Call of Duty, World of Warcraft and Candy Crush. Spencer plans to revive some old classics.

Speaking on the Washington Post Spencer said: “We’re hoping that we’ll be able to work with them when the deal closes to make sure we have resources to work on franchises that I love from my childhood, and that the teams really want to get. I’m looking forward to these conversations. I really think it’s about adding resources and increasing capability.”

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