Microsoft has managed to fly under the regulatory radar as big tech rivals like Google, Amazon and Meta take heat in Washington, DC and Brussels – but the company’s plan to acquire outrageous game developer Activision-Blizzard for $68.7 billion could change everything.
If the deal goes through, it would give console maker Xbox control of some of the world’s most popular video game franchises, including Call of Duty, World of Warcraft and Candy Crush. This level of focus on both hardware and software is sure to attract the attention of antitrust authorities, according to technology and DC insiders.
“It’s going to be a soap opera,” Dan Ives, managing director of Wedbush Securities, told the Post. “There are going to be a lot of exams.”
With a market capitalization of $2.3 trillion, Microsoft is the world’s second most valuable company after Apple, with businesses ranging from cloud computing to social media. Yet even as competition authorities in the United States and Europe have set their sights on Apple, Google, Amazon and Meta in recent years, Microsoft has largely avoided any trouble.
This environment has put Microsoft in a unique position among tech giants: It’s big enough to shell out $68.7 billion in cash, but low-key enough to have a chance of getting the deal through regulators.
“Microsoft knows there’s only one company that can make a deal like this,” Ives said, giving the deal a 75% to 80% chance of going through.
That uncertainty appears to be reflected in Activision-Blizzard’s stock price, which hovered around $82 on Tuesday afternoon, well below the $95 a share Microsoft wants to pay for the company.
The FTC and DOJ declined to comment at a press conference Tuesday when asked about possible investigations or lawsuits regarding the Microsoft-Activision deal. Insiders say either agency could potentially try to block the deal.
In another sign of potential trouble, the deal includes a $3 billion “break fee” that Microsoft will pay Activision-Blizzard if the deal fails – a fee far higher than the billion dollars that would typically be included in a OK. of this size, according to Ives.
“It’s Activision hedging their bets,” he said.
Matt Stoller, antitrust expert and activist and former staffer of Sen. Bernie Sanders, also said high breakage fees mean Microsoft and Activision-Blizzard are bracing for trouble.
Stoller compared the deal to Disney’s acquisitions of Pixar, Marvel, Lucasfilm and large parts of 21st Century Fox, which he said gave the company a monopoly in the entertainment industry.
“Microsoft is trying to do to the gaming industry what Disney did to Hollywood,” Stoller told the Post. “He should be blocked.”
A potential antitrust case over the Activision deal wouldn’t be the first time Microsoft has been accused of building a monopoly.
In the late 1990s, the company was sued by the Department of Justice for its practice of bundling the Windows Explorer browser with the Windows operating system for free. Microsoft settled the case in 2002 and agreed to make it easier for competitors to run their software on Windows devices.