It was in January 2022 that Microsoft announced its bold intention to acquire Activision, one of the leading gaming software producers in the world. Microsoft would shell out a massive $68.7 billion to get the company. This would make Microsoft the most prominent game developer in the world. That was a good eight months ago, and the deal has still not been sealed. So what has been happening all this time? First, we need to understand that this purchase is not as simple as buying a car, playing at a blackjack table or ordering a takeaway supper; it’s far more complex, and those complexities have stalled this transaction.
The Regulatory Bodies
The deal has had to undergo rigorous evaluations by global regulators such as the SEC, CMA, and the European Union Competition. Earlier this month, the U.K’s competition watchdog raised concerns about the monopoly Microsoft would have in the subscription market. Call of Duty, developed by Activision, would be wholly owned by Microsoft and available on Microsoft’s Game Pass.
The availability of Call of Duty has been a point of contention with FTC, CMA, the European Commission, and competitors such as Sony. Microsoft head of Xbox Phil Spencer has likened the call of duty acquisition to Minecraft, where the game is still available on other platforms. The CMA has called for a move to phase two investigation of this potential anti-competition threat. Phase two will have an independent panel examine how the acquisition of games like Call of Duty and World of Warcraft will impact competitors.
The GAC (General Authority for Competition) in Saudi Arabia has approved Microsoft’s acquisition. They are the first regulatory body to announce its approval publicly. The ruling is available on GAC’s website, and they also posted a copy of its No Objection Certificate on Twitter.
Interesting to Note
- Sony has been the loudest critic of the merger, which is not surprising since Playstation would be the one most impacted by it as they will eventually lose Activision games on their consoles over time.
- Activision shareholders approved the deal in April (98% votes in favour); once the deal is approved, Activision will delist from the Nasdaq. Activision shareholders will be given an option to convert shares to Microsoft. Shareholders will also have an option to receive $95 per share in cash.
- The acquisition will give Microsoft Game Pass access to Activision Blizzard’s 400 million active players. Games Pass currently has just over 25 million subscribers.
- Microsoft has hit back at Sony, accusing them of paying software developers to block games from appearing on Game Pass; how true this is, we don’t know.
- Meta has come out as a big supporter of Microsoft in this transaction. A Twitter post from them even stated that an abundance of new gaming content was constantly produced.
Despite this back and forth and in-depth investigations, Microsoft CEO Satya Nadella remains confident that the deal will go through. Some key industry players also agree with the CEO’s sentiment and speculate that the deal could be finalised by June 2023. Should this deal be concluded, it will be the most expensive acquisition in the gaming industry and the third in corporate.