Title: Microsoft’s Acquisition of Activision Blizzard Receives US Court Approval
In a surprising turn of events, a US federal judge has ruled in favor of Microsoft, granting the tech giant the green light to proceed with its planned acquisition of gaming publisher Activision Blizzard. The decision marks a significant development that greatly increases the likelihood of the deal being finalized. As a result, shares of Activision Blizzard soared by 10% following the announcement, bringing them just 4% away from the agreed-upon deal price.
Microsoft’s intention to acquire Activision Blizzard for a staggering $69 billion in cash or $95 per share was initially met with skepticism and faced numerous hurdles. Governments worldwide had to approve the deal, and while most readily waved it through, the US Federal Trade Commission (FTC) expressed concerns over potential monopolization of the emerging cloud gaming market and exclusive rights to Activision Blizzard’s popular title, Call of Duty, on the Xbox platform.
However, the recent court ruling has paved the way for the merger to proceed in the United States. The court dismissed the FTC’s arguments, asserting that Microsoft’s existing deals with competitors guarantee the availability of Call of Duty across multiple platforms. The judge also found a lack of evidence that customers would be harmed with Activision Blizzard being under the Xbox umbrella.
While the FTC retains the ability to take further action in the future, such as suing Microsoft to divest Activision Blizzard, this initial roadblock has been overcome. The positive decision has naturally led to a surge in Activision Blizzard’s stock, with prices closing at around $91, representing a 10% increase for the day.
It’s worth noting that the United Kingdom’s Competition and Markets Authority (CMA) had previously voted against the acquisition due to concerns regarding monopolization in the cloud gaming market. However, following the court’s ruling, Microsoft and the CMA have expressed their intention to address the regulator’s concerns and resume negotiations. Microsoft must finalize the deal by July 18 to avoid paying a $3 billion breakup fee to Activision Blizzard.
From a consumer perspective, the gaming industry landscape is not expected to undergo significant changes. Xbox has publicly pledged to keep Call of Duty available on various platforms, ensuring game accessibility for players. However, this acquisition carries implications for the gaming hardware industry in different ways.
Firstly, it is likely to level the playing field for Xbox compared to its competitors, Sony’s PlayStation and Nintendo’s Switch console. Both Sony and Nintendo have exclusive game production studios, which gave the FTC grounds to oppose the merger initially. With ownership of Activision Blizzard’s assets, Microsoft has the opportunity to regain market share.
Secondly, Microsoft plans to utilize Activision Blizzard’s mobile gaming assets to establish a mobile games app store, effectively competing with the dominant Apple App Store and Google Play. The current duopoly charges a 30% take rate on all in-app purchases, which has long been a complaint among mobile game publishers. With a lower take rate, Microsoft has the potential to disrupt the existing platforms and offer an appealing alternative.
Lastly, the court’s approval of this acquisition may open the floodgates for other technology giants to pursue gaming publishers such as Electronic Arts, Take-Two Interactive, or Ubisoft. Regulators would find it challenging to argue against industry consolidation if one of the world’s largest gaming platforms succeeds in acquiring a major publisher.
In conclusion, Microsoft’s journey to acquire Activision Blizzard is entering its final stages, with the court ruling in the company’s favor providing a significant boost. The deal’s closure will likely result in a stronger Xbox presence in the gaming industry, and Microsoft’s potential launch of a mobile games app store could disrupt the existing duopoly. As the gaming industry continues to evolve, the ramifications of this acquisition are poised to leave a lasting impact.
