As Microsoft and Xbox Game Studios prepare for the launch of its biggest game ever later in Starfield in September, it’s also dealing with some turbulence as it prepares to acquire Activision Blizzard.
This year-long dance on the chessboard of gaming, which has encountered multiple obstacles, remains under scrutiny by regulators worldwide.
The most recent country to throw its hat into the ring, ready to tussle against Microsoft and its arguments for its buyout is the Commerce Commission of New Zealand.
The Commission’s spotlight is now trained on the $68.7 billion dollar deal, the gears of which are grinding slowly, entangled in a web of regulatory concern. They’ve gone public with their apprehension, publishing a Statement of Issues outlining potential competition concerns they have with the proposed acquisition. The Commission, it seems, is taking no chances. They’re inviting submissions from Microsoft, Activision Blizzard, and all interested parties on the issues that their initial investigation has brought to light.
Their concerns, echoing those of the UK Competition and Markets Authority (CMA), the Federal Trade Commission (FTC), and the Competition Appeal Tribunal (CAT), revolve primarily around cloud gaming. Regulators fear that the merger might “substantially lessen competition due to vertical effects in the distribution of video games for cloud gaming services,” or, in simpler terms, they’re concerned the new super-entity might cut out the competition by controlling access to essential gaming content.
Of particular interest here is the fate of Call of Duty, which recently welcomed the second-fastest-selling game of all time with Call of Duty: Modern Warfare 2 last year.
The fear is that Microsoft might hold the keys to the castle, so to speak, denying rivals such as Sony or NVIDIA access to this popular franchise and thereby affecting the competitive balance in cloud gaming.
The other side of the coin, not to be neglected, is the console market. There is a lingering question as to whether the deal could tip the scales there too. Post-acquisition, there’s a chance Microsoft might play favorites with its Xbox brand and, in essence, make Activision Blizzard content exclusive to the Xbox platform, despite earlier denials.
Regulators are not idle, however. They are doing their due diligence, with the New Zealand Commerce Commission recently extending their decision deadline to July 17, while calling for submissions from interested parties by July 4. In parallel, an evidentiary hearing was held on June 22 and 23, following the FTC’s complaint and temporary block on the acquisition.
This tussle has drawn global attention, with both opposition and acceptance in different corners of the world. While the acquisition has cleared in over 40 countries, including China, South Korea, and the entire European Economic Area, it faces staunch opposition in the United States and the United Kingdom, among others.
Notably, the deal has experienced significant pushback in the UK, where the CMA has officially blocked the merger. In the US, the FTC has gone to a federal court, seeking a preliminary injunction to prevent closure. The court’s decision on this matter will be pivotal, not only for the Microsoft-Activision deal but potentially for future gaming industry acquisitions as well.
The stakes are high, and the clock is ticking. The July 18 deadline looms large, after which Microsoft could be forced to pay a hefty $3 billion breakup fee to Activision Blizzard, unless a renegotiation occurs. Microsoft’s ambition to merge with one of gaming’s finest publishers, Activision Blizzard, and potentially reshape the landscape of the gaming world hangs in the balance, and only time will tell how this high-stakes drama unfolds.
