What challenges does Microsoft's $69 billion Activision deal face?

Microsoft announced the Activision bid in January last year to boost its firepower in the booming video-gaming market, take on leaders Tencent and Sony, and lay the base for its investment in metaverse and digital spaces.

| Updated on: Jul 14 2023, 17:24 IST
Microsoft Teams Rooms gets 4 features to boost productivity; check them out here
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1/5 Cloud IntelliFrame: This feature breaks up the single video feed of the room into a composite view made up of focused and framed video tiles that feature in-room attendees. This lets remote attendees better see the faces of everyone in the meeting.  (Unsplash)
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2/5 Front Row: To further bring in-room focus to remote participants, the Front Row feature will replace each individual’s background with a shared background. Not just that, it will then apply a uniform size to each video feed so that remote attendees appear life-sized to participants in the room no matter how far away or close they might be to their cameras. (Microsoft)
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3/5 Spatial audio: This feature will help in-room attendees more naturally track who is speaking in the video gallery with audio cues. Interestingly, if someone on the left side of the video gallery is speaking, their voice comes from that direction, just as it would if they were physically in the room. This feature is also coming to online meetings.  (Unsplash)
4/5 Collaborative notes: Soon, meeting attendees will be able to co-create and collaborate in real time on the meeting agenda, notes, and follow-up tasks. (Microsoft )
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5/5 What is Collaborative notes? These are a Loop components that always stay in sync and can be easily copied and shared in chats, group chats, emails, and other documents.   (Unsplash)
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FILE PHOTO: Microsoft logo is seen on a smartphone placed on displayed Activision Blizzard's games characters in this illustration taken January 18, 2022. REUTERS/Dado Ruvic/Illustration/File Photo (REUTERS)

The U.S. Federal Trade Commission on Thursday asked an appeals court to temporarily stop Microsoft's $69 billion acquisition of video game maker Activision Blizzard, hours after a federal judge rejected a similar request.

The deal is facing varying responses around the world from regulators.


Microsoft announced the Activision bid in January last year to boost its firepower in the booming videogaming market, take on leaders Tencent and Sony, and lay the base for its investment in metaverse and digital spaces which are made more lifelike by the use of virtual reality (VR) or augmented reality (AR).

To quell antitrust concerns Microsoft, which owns Xbox, in February said it is ready to offer rivals licensing deals but it would not to sell Activision's lucrative "Call of Duty" franchise.


Britain's antitrust regulator, which blocked the deal in April, took a U-turn after a federal U.S. judge rejected the FTC's request to put the deal on hold.

UK's Competition and Markets Authority said a restructured deal between the two U.S. companies could satisfy its concerns, subject to a new investigation. The CMA extended its deadline to make a decision to Aug. 29.

The U.S. antitrust regulator and Britain's Competition and Markets Authority have varying concerns over the deal.

The FTC says the deal could let Microsoft degrade Activision's game quality or player experience on rival consoles like Nintendo consoles and Sony Group Corp's PlayStation, manipulate pricing or change terms or timing of access to Activision content.

Britain's CMA stopped the deal over anti-competitive concerns around cloud gaming, which it called an "an emerging and exciting market", as it allows users to play on any device.

"Cloud gaming is growing fast with the potential to change gaming ... freeing people from the need to rely on expensive consoles and gaming PCs and giving them more choice over how and where they play games," said CMA panel chair Martin Coleman.

However, the deal was approved by EU antitrust regulators in May, with the European Commission saying the remedies offered by Microsoft addressed their concerns.


Market leader Sony wants the deal to be blocked. A group of 10 gamers in the United States has filed a private consumer antitrust lawsuit over the deal. But Microsoft in May defeated the gamers' bid to block the deal.

The European Games Development Federation, with more than 2,500 game studios in 22 European countries, and the UNI Global Union back the acquisition.

Nvidia also said it supported the deal.


Microsoft President Brad Smith said he doesn't think "it is feasible or realistic to think that one game or one slice of this company (Activision) can be carved out and separated from the rest".

Smith criticised Britain after the CMA veto in April, saying it would shake confidence in the UK as a destination for tech, with the company calling the UK regulator an "outlier" for blocking the deal.

Both companies are considering giving up some control of their cloud-gaming business in the UK to appease regulators so they can complete their merger, Bloomberg News reported.


Both companies have signed 10-year licensing deals that will bring Call of Duty to their gaming platform if the Activision deal is approved.

Spain's Nware also signed a 10-year deal to bring Xbox and Activision Blizzard games to the Spanish cloud-gaming platform.


Antitrust experts say the FTC faces an uphill battle to convince a judge to block the deal because of the voluntary concessions offered by Microsoft to allay fears it could dominate the gaming market.

Behavioural remedies like licensing deals are rarely sufficient for the CMA, which flexed its muscles in 2021 when it ordered Facebook owner Meta to sell animated-images platform Giphy after the deal had been completed.


Brazil, Chile, Serbia and Saudi Arabia have given unconditional approval.


After a U.S. judge gave a thumbs-up to the deal, Smith said the focus would be on considering how the transaction could be changed to address the CMA's concerns.

Microsoft said the company would fight the FTC's appeal after the U.S. regulator failed to show the deal would be illegal under antitrust law in a federal court in San Francisco.

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First Published Date: 14 Jul, 16:41 IST