Microsoft Completes $69 Billion Acquisition of Activision Blizzard Amid Regulatory Hurdles

After almost twenty months, the Internet Giant Microsoft has completed its deal to acquire Activision Blizzard for 69 billion dollars.

The deal took this long because of the restrictions from the authorities of the Western countries, mainly the United States, the United Kingdom, and the European Union. The parliament and lawmakers of these countries were arguing that Microsoft would end the competition in the gaming industries after acquiring one of the most popular game studios, Activision Blizzard.

Activision Blizzard is a gaming holding company that owns Activision -the publisher of Call of Duty, - Blizzard Entertainment, and King - the publisher of Candy Crush. The company is based in Santa Monica, United States, and was valued at around 72 billion dollars in 2021.

Microsoft completed the deal today, on 13th October 2023, and now owns the rights to titles like Diablo, Call of Duty, Candy Crush Saga, Warcraft, and Spyro the Dragon.

The United States and the European Union authorities had already given their approval for the deal long back. The only hurdle was the Competition and Market Authority of the United Kingdom.

The Competition and Market Authority argued that Microsoft will make popular Activision titles like Call of Duty exclusive to Xbox, which will affect the market of Sony’s PlayStation. After Microsoft assured the UK regulators that it is not going to make any of the games exclusive to Xbox anytime soon, the Competition And Market Authority gave the clean cheat to the deal on Friday.

“We now have all regulatory approvals necessary to close, and we look forward to bringing joy and connection to even more players around the world,” Activision Blizzard CEO Bobby Kotick said in a statement to employees.

“We delivered a clear message to Microsoft that the deal would be blocked unless they comprehensively addressed our concerns and stuck to our guns on that,” CMA chief Sarah Cardell said. “With the sale of Activision’s cloud streaming rights to Ubisoft, we’ve made sure Microsoft can’t have a stranglehold over this important and rapidly developing market.”

The gaming industry is valued at around 250 billion US dollars and is expected to reach around 600 billion US dollars by 2023. Microsoft already holds a big share of this market, and along with other big players, the market for small and new game developers is less than 10 percent, which is going to reduce. Activision also made a deal with Ubisoft to sell its cloud gaming rights.

Mergers and acquisitions are good, but they usually kill innovations, and there is no chance for new companies. Let us explain it with an example. Take a few companies: A, B, C, and D. All companies make games according to their definite style and suited for their targeted audience. Now, company A acquires company B and company C. Company A will adopt the styles of making games of the other two companies, but it will mostly make games according to its style as the higher ranking employees would usually be from company A. Also, the previous market share was divided equally among the four companies, which is 25% each. Now, company A controls 75% of the market share, so it has a monopoly. Company A can set the prizes of the titles according to its wishes, and the people who play those titles have nothing else to do but buy them.

In conclusion, mergers are not a bad thing, but monopoly is. The authorities need to intervene in deals like these as companies like Google, Apple, and Microsoft already control almost everything we do on the internet.

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