UK Probes Microsoft's $69 Billion Purchase of Activision

The UK antitrust watchdog will now scrutinize Microsoft's planned purchase of Activision Blizzard Inc. for $69 billion. Other regulators are also examining the video game deal. The Competition and Markets Authority said it would consider whether this deal would harm competition and lead to a reduced price or a shortage of choices. It also stated that it would collaborate with counterparts across the globe. By September 1, 2022, it will decide whether there is a need to launch an in-depth investigation or not.

The Federal Trade Commission is also examining the deal, said chair Lina Khan in June. That investigation will focus on the company's gaming portfolio, including Microsoft's consoles and hardware systems. Lawmakers have also urged FTC to examine how the proposed deal might impact the workers of Activision.

In a statement, the UK's Competition and Markets Authority stated that its investigation would consider whether the deal may harm competition through higher prices, lower quality, or reduced choice.

Microsoft's corporate vice president and general counsel, Lisa Tanzi, said regulatory scrutiny of the deal was expected and shared that the company would "fully cooperate" with the CMA. Tanzi said, "We're committed to answering questions from regulators and ultimately believe a thorough review will help the deal close with broad confidence and that it will be positive for competition. We remain confident the deal will close in the fiscal year 2023 as initially anticipated."

The Competition and Markets Authority has scrutinized and sometimes prevented big tech mergers and acquisitions in the past. It cleared Microsoft's $16 billion deal to buy speech recognition company Nuance. It also blocked Facebook's acquisition of the GIF-sharing platform Giphy because it hurt social media users and advertisers by smothering competition for animated images. It also ordered the deal unwound

If Microsoft's acquisition of Activision is approved, it would have huge implications for the video game industry, with a current worth of $190 billion. It will offer control of Candy Crush, Call of Duty, and Warcraft to Microsoft.

Microsoft is hoping that this new purchase will help it in the race to build metaverse, a hypothetical network of large virtual worlds, just like Meta and Sony are hoping to do.

Analysts have doubts about the approval of the deal.

Microsoft is doing well in the video game industry. Microsoft is one of the largest game console manufacturers, thanks to its Xbox division. It is working on enhancing and expanding its first-party content and has even acquired Bethesda for the same. For those unaware, Bethesda is the studio behind popular game series like The Elder Scrolls and Doom. Microsoft acquired it for $7.5 billion.

On the other hand, Activision has been dealing with several internal issues in the past year, including serious accusations of sexual harassment, walkouts from the staff, and even unionization efforts. Employees of the company are clearly unhappy with the management and have even called on CEO Bobby Kotick to resign. Microsoft announced that Kotick will stay as CEO of Activision until after the deal closes. Plans for after the deal were not shared.



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