Microsoft Corporation triumphed over the US Federal Trade Commission (FTC) as it secured a court’s endorsement for its ambitious $69 billion acquisition of Activision Blizzard Inc.
The monumental decision was made by Judge Jacqueline Scott Corley in San Francisco, marking a significant step towards finalizing the deal before the July 18 deadline. The only exception to this approval comes from the UK, which rejected the agreement in May.
Microsoft’s acquisition of Activision signifies a strategic move into the mobile gaming market, where the company currently holds a minimal presence. Activision Blizzard is the parent company of King, the creator of the wildly popular mobile game Candy Crush. According to Microsoft, this merger will significantly boost the company’s ranking in the global video game industry, placing it as the third largest, behind industry giants Sony Corp. and China’s Tencent Holdings Ltd, the publisher of League of Legends.
Upon the announcement of the court’s approval, Activision’s stock surged as much as 6%, reaching $86.31 by 11:08 a.m. in New York. Microsoft experienced a marginal loss of less than 1%, with its stock priced at $330.06.
Responses to the Acquisition and Its Potential Impact
In response to the court’s decision, Microsoft President Brad Smith expressed his gratitude and reaffirmed the company’s commitment to addressing regulatory concerns. “We are committed to working creatively and collaboratively to address regulatory concerns,” he stated. Activision CEO Bobby Kotick echoed this positive sentiment, emphasizing that the merger will stimulate competition rather than permit the existing market leaders to monopolize the rapidly growing industry.
However, the FTC expressed disappointment at this outcome, warning of the merger’s potential to undermine competition in cloud gaming, subscription services, and consoles. FTC spokesman Douglas Farrar emphasized the commission’s commitment to preserving competition and protecting consumers, indicating they will announce their next steps soon. The FTC has been particularly concerned that Microsoft, post-merger, would be encouraged to restrict popular games like Call of Duty from competing platforms and subscription services.
The Microsoft-Activision merger is part of a series of tech platform acquisitions scrutinized by FTC Chair Lina Khan, who has been actively enforcing merger laws since her appointment by President Biden.
This acquisition of Activision Blizzard is expected to significantly enhance Microsoft’s mobile gaming portfolio, which will now include popular titles like Candy Crush and Call of Duty Mobile. However, critics worry about potentially anticompetitive behaviour, fearing Microsoft could restrict access to its blockbuster titles or publish more games exclusively for Xbox and PC.
