Microsoft Inches Closer to Buying Activision Blizzard

It has been over a year since Microsoft announced a some-what unexpected decision to buy Activision Blizzard Inc. — the maker of World of Warcraft, Call of Duty, and Diablo — for a whopping $68.7 billion in cash. This would be one of the biggest, if not the biggest, acquisitions in the video gaming industry. And yet, the Windows maker is no closer to actually buying the company because of regulatory hurdles and resistance from gamers and other video game makers, specifically Sony.

Until this past week.

Microsoft finally got a break on two fronts in its quest to purchase Activision Blizzard Inc., one in the U.S. and another in the UK, which may give it some hope in being able to complete the acquisition.

The company was facing a consumer antitrust lawsuit in the U.S. by gamers concerned that the acquisition would lead to "higher prices, less innovation, less creativity, less consumer choice, decreased output, and other potential anticompetitive effects." Unfortunately for them, the judge overseeing the case ruled that said gamers did not provide enough evidence of how that might happen, throwing the lawsuit out. Ouch!

However, the biggest win may have come from the UK, where the country's competition authority took a U-turn on whether the purchase would hurt competition. Having initially suggested that the transaction could result in higher prices, fewer choices and less innovation — particularly in the console market — the U.K.'s Competition and Markets Authority (CMA) now believes none of that is possible since doing so would only hurt Microsoft.

"We have now provisionally concluded that the merger will not result in a substantial lessening of competition in console gaming services because the cost to Microsoft of withholding Call of Duty from PlayStation would outweigh any gains from taking such action," Martin Coleman, who is reviewing the acquisition on behalf of the U.K.'s competition authority, said in a statement. He was referring to concerns that Microsoft would make the Call of Duty games exclusive to its console (the Xbox) following the acquisition and bar Sony's PlayStation from having access to them in the future.

Coleman's comment makes sense! Call of Duty is the best-selling first-person shooter video game in the world, and limiting past, current, and future titles from appearing on Sony's PlayStation — which, to be clear, captures 70% of the global console market —  would only hurt Microsoft.

For now, investors are happy with what they have, with Activision Blizzard Inc.'s stock price shooting up on Friday:

Microsoft is still not out of the weeds, though, since the CMA may change its position again ahead of a final decision expected on April 26. Of concern is also Microsoft's dominance in the "cloud gaming market," i.e. the Xbox Game Pass, which gives gamers access to high-quality games in exchange for a nominal fee every month. "Our provisional view that this deal raises concerns in the cloud gaming market is not affected by today’s announcement. Our investigation remains on course for completion by the end of April," Coleman said.

The CMA still believes the deal could harm competition there, perhaps because Microsoft could refuse to allow Call of Duty to appear on Sony's Game Pass competitor PS Plus.

Microsoft has, of course, denied such claims and instead suggested entering a deal with Sony that would guarantee that Call of Duty games would appear on its competitor's platforms for a 10-year period — sufficient time for Sony to develop its own shooter, should they deem it necessary to do so.

Elsewhere, the U.S. Federal Trade Commission is still seeking to block the merger over concerns that the Xbox maker would "would gain control of top video game franchises, enabling it to harm competition in high-performance gaming consoles and subscription services by denying or degrading rivals’ access to its popular content."

Microsoft continues steaming ahead. The company ranked #71 on HackerNoon's Tech Company Rankings this week.

In Other News.. 📰

• Elon Musk thinks Twitter, which ranked #17 this week, is worth less than half of what he paid for the social media company.
• Microsoft does not want its competitors to use its internet-search data to train their own AI products.
• Apple CEO Tim Cook is visiting China, and can't stop saying nice things about the country 🥲. Apple ranked #7 this week.
• Intel co-founder Gordon Moore has passed away. 😞

And that's a wrap! Don't forget to share this newsletter with your family and friends! See y'all next week. PEACE! ☮️

— Sheharyar Khan, Editor, Business Tech @ HackerNoon