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.
Sources:
https://indianexpress.com/article/technology/tech-news-technology/uk-probes-microsofts-69-billion-purchase-of-activision-8013071/
https://www.cnbc.com/2022/07/06/microsofts-69-billion-activision-takeover-faces-competition-probe-in-the-uk.html
https://www.thespec.com/ts/entertainment/2022/07/06/microsofts-blizzard-activision-bid-faces-uk-antitrust-probe.html