From Inception to Lawsuits: The Progress of the Biggest Deal in Gaming History
Microsoft’s ongoing efforts to acquire Activision Blizzard have captivated the gaming industry. Regardless of your stance on the deal, it’s undeniable that it holds significant implications for every gaming sector, from mobile to console to cloud gaming. This acquisition has faced scrutiny from competitors and legislators, and while the companies are slowly making progress toward finalizing the deal, there’s still a possibility that it could be abandoned, which would have a massive impact on the industry as a whole. So, let’s take a look at how we got here and what the future holds for this monumental deal.
July 21st 2023
In July, as the contractual deadline loomed, a California judge denied the FTC’s preliminary injunction against the deal. This decision prompted the FTC to launch its own appeal, which they ultimately lost on July 17. With this ruling, Microsoft and Activision Blizzard were given the opportunity to close the deal before the contractual deadline. However, this was a risky move since it relied on the assumption that the companies would win their ongoing court cases with the CMA and FTC. Unfortunately, a speedy decision by the CMA did not materialize.
The original deadline for the deal passed on July 18 without any progress. Consequently, Microsoft and Activision formally extended the deadline until October 18, two months after the court cases are set to conclude. In a show of their commitment to the deal, both companies agreed to an increased termination fee if either party decided to walk away. The fee would rise from $3.5 billion to $4.5 billion if the deal isn’t finalized by September 15. Activision also agreed to explore lawful alternatives to consummate the merger with the CMA if necessary. This suggests a positive outlook for the deal, although the newly merged entity may have to find an expensive workaround to address the CMA’s objections when conducting business in the UK.
June 2023
Microsoft began preparing to appeal the CMA’s decision, aiming to overturn their ruling. However, the CMA issued an interim order in May that prevented both companies from making investments in each other. This order signaled the CMA’s ongoing concerns about the deal. Throughout this period, potential disagreements between Microsoft and Activision Blizzard started to emerge. Microsoft CEO Satya Nadella didn’t dismiss the idea of removing Activision Blizzard’s products from the UK market, which came to be known as a “Mexit” situation. Despite these concerns, Activision Blizzard remained optimistic but highlighted the possibility of abandoning the deal if any governmental authority prohibited or made the merger illegal.
While various markets, including China, South Korea, and Ukraine, approved the deal, the EU’s approval caused significant controversy. The EU was satisfied with Microsoft’s proposed concessions on cloud gaming, which the CMA rejected. The UK’s position as one of the deal’s strongest critics was further reinforced.
April 2023
April was relatively quiet for the deal, but it was merely the calm before the storm. On April 28, the CMA officially blocked the deal, citing concerns over Microsoft’s dominance in the global cloud gaming market. According to the CMA, this deal would only strengthen Microsoft’s hold on the market.
March 2023
No significant developments regarding the deal were reported in March.
February 2023
No significant developments regarding the deal were reported in February.
January 2023
Talks between Microsoft and the FTC reached a standstill on January 4, with no substantive discussions taking place to settle the suit outside of court. Despite their previous reluctance, Microsoft agreed to a binding agreement to maintain Call of Duty’s availability. It was also reported that the FTC’s court case against the deal would lead to a missed contractual deadline, requiring the companies to renegotiate the terms. This could potentially lead to Activision Blizzard demanding a higher fee due to the significant increase in stock prices. Both Google and Nvidia joined the discussion, with Google expressing concerns about Microsoft introducing its own mobile app store and the potential harm it could cause to Google Play’s revenue. The CMA extended the deadline for its investigation to April and concluded that the deal required further scrutiny due to concerns about the merged entity’s incentive to harm Sony.
December 2022
No significant developments regarding the deal were reported in December.
November 2022
No significant developments regarding the deal were reported in November.
October 2022
No significant developments regarding the deal were reported in October.
September 2022
On September 1, the CMA raised significant concerns about the deal’s potential impact on competition. They believed that Microsoft’s ownership of Activision Blizzard could be leveraged to harm competition in the growing cloud gaming services market. The investigation entered a second stage as the CMA grew concerned about PlayStation’s ability to compete after the acquisition due to Microsoft’s control over the popular Call of Duty franchise.
August 2022
Saudi Arabia became the first country to approve the acquisition, signaling the start of the deal’s completion. Interestingly, Saudi Arabia stood to gain over $1 billion from the deal due to its sizable stake in Activision Blizzard through its Public Investment Fund.
May 2022
In the first major obstacle, New York City filed a lawsuit against Activision Blizzard, citing concerns that the deal undervalued the company and allowed its CEO, Bobby Kotick, to evade accountability for ongoing legal issues faced by the company.
January 2022
Microsoft officially announced the acquisition of Activision Blizzard for a massive $68.7 billion, making it the most expensive gaming acquisition in history. The deal emphasized the importance of mobile gaming, with Microsoft hoping to tap into the success of Activision Blizzard’s mobile titles. However, the deal was soon met with challenges as Activision Blizzard faced declining sales, delayed releases, and a series of scandals related to sexual abuse and harassment within the company.