Billion deal: Microsoft downplays Activision – no “must have” titles

Created: 04/08/2022 15:18

By: Daniel Neubert

Microsoft announced earlier this year that it intends to buy publisher Activision Blizzard.

But the deal must first withstand a review process.

REDMOND, Washington – Earlier this year it was announced that the technology group Microsoft plans to take over the games giant Activision Blizzard.

Microsoft wanted to pay a sum of 68.7 billion US dollars for this.

However, in the case of a takeover of this magnitude, various independent review boards intervene to ensure that applicable laws and antitrust laws are complied with.

Microsoft must now address antitrust concerns before the deal can be finalized.

Microsoft wants to take over Activision Blizzard, but there is still a long way to go

Why is?

At the beginning of the year, the Microsoft group surprised the entire gaming industry by announcing that it wanted to take over the publisher Activision Blizzard.

Microsoft bought the parent company of games publisher Bethesda last year.

In April 2022, Blizzard shareholders also gave their approval to the deal.

However, before the sale can be completed, an examination procedure must be initiated to clarify the legal framework of the takeover.

What is this test procedure?

In the review process for Microsoft's acquisition of Activision Blizzard, the company must provide information to various review boards and government agencies.

Microsoft now had to answer questions from the New Zealand Commerce Commission.

This is what Microsoft says about the deal:

When it came to the fact that the acquisition could harm general competition in the market, Microsoft responded as follows:

"Specifically, with respect to Activision Blizzard's video games, there is nothing unique about the video games developed and published by Activision Blizzard that would be a "must have" for competing PC and console video game distributors and raise concerns of foreclosure ."

Microsoft (written response to the New Zealand Commerce Commission)

What does Microsoft mean by that?

This answer from Microsoft may seem strange at first.

Why would Microsoft care about a company whose products have nothing unique about them and aren't what they call a "must have"?

The answer is simple: Microsoft must first and foremost dispel the antitrust concerns of the various commissions in the review process in order to be able to process the planned takeover.

It is also about convincing the auditors that the deal does not put Microsoft in a monopoly position and thus violates applicable market conditions.

It would not be a smart move to convince the auditors with their own statements that Microsoft is securing enormous market power with the deal.

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Leading tech companies from the industry were also asked how they view the deal.

It is interesting that only the direct competitor Sony opposes the deal from Microsoft.

This also seems to be the reason why Microsoft's response tends to downplay Activision Blizzard's games.

Microsoft defends billion-dollar deal – “Activision has no must-have titles” © Microsoft Corporation / Unsplash.com (Montage)

This is the biggest deal in the gaming industry:

Microsoft's takeover process is scheduled to be completed by summer 2023.

The deal is unique in terms of its size in the games industry; a comparable takeover has never taken place before.

Microsoft has never spent such sums on any other company either.

The most expensive company that Microsoft had taken over to date was the company "LinkedIn" in 2016 for 26.2 billion US dollars.

Microsoft seems to see the future of the group clearly in the gaming sector.

Overall, Microsoft made a relatively "cheap" deal by buying Activision Blizzard.

After the sexism scandal in the summer of 2021 at Activision Blizzard, the publisher's shares also fell by almost half.

In this respect, a favorable opportunity presented itself for Microsoft.

According to industry insiders, however, it was Activision Blizzard that various companies offered to buy.

Discussions are also said to have taken place with Facebook.