Microsoft’s biggest coup is a fact

Now it’s official. Microsoft buys the world’s largest game publisher Activision Blizzard, acquiring well-known gaming brands such as ‘Call of Duty’, ‘World of Warcraft’ and ‘Diablo’. Microsoft is also acquiring Activision Blizzard’s extremely lucrative mobile gaming business with long-standing mobile games such as “Candy Crush.”

Microsoft and Activision Blizzard announced the completion of the $69 billion deal on Friday afternoon. A few hours earlier, the British competition authorities had given the green light. This was the final hurdle before the takeover.

According to its own information, Microsoft will become “the third largest game manufacturer in terms of turnover, after Tencent and Sony”. Xbox boss Phil Spencer said of the deal: “We love games. We play games, make games, and know firsthand how much games mean to all of us as individuals and as a community. And today we officially welcome Activision Blizzard and its teams to Xbox.”

Microsoft’s biggest coup

The purchase of Activision Blizzard is the largest acquisition Microsoft has ever made. It easily surpasses the $26 billion it paid to acquire LinkedIn in 2016, or the $7.5 billion it spent on game publisher Bethesda in 2021.

Microsoft now plans to include many of Activision Blizzard’s games into its “Xbox Game Pass” gaming subscription service as soon as possible. Activision Blizzard had previously made it clear that major games such as ‘Modern Warfare 3’ and ‘Diablo IV’ would not be available via ‘Game Pass’ this year.

Microsoft is becoming a gaming giant

Microsoft, which already has game studios with well-known titles such as ‘Minecraft’ under its roof, will significantly strengthen its market position. Activision Blizzard owns many major game studios and gaming brands for PC, consoles and mobile devices. The company’s games attract nearly 400 million players every month. About 245 million of these are attributable to “Candy Crush” developer King, which was acquired a few years ago.

With the acquisition, Microsoft aims to add significantly more games to its ‘Game Pass’ subscription service for Xbox and PC. This gives users access to games from different providers for a monthly subscription fee. With its ‘Netflix for gamers’, Microsoft is trying to expand its market share in the gaming industry – the purchase of Activision is central to this.

On the other hand, the deal gives Microsoft ownership of a number of financially extremely successful mobile games. Microsoft is becoming a major player in the lucrative mobile gaming market. The group is also planning its own app store for mobile games, and games like “Call of Duty: Mobile” and “Candy Crush Saga” will likely play a big role in this.

The EU and the British have deprived Microsoft of important concessions

The takeover took a long time. One of the fears of competition watchdogs was that Microsoft would only offer the games on its Xbox console and its own cloud service. In the course of investigations by regulators in several countries, the company promised to make the games available for ten years on other consoles such as Sony’s Playstation or Nintendo’s Switch, as well as on cloud platforms from other providers.

British antitrust watchdogs in particular feared that the purchase of Activision Blizzard would limit competition in cloud gaming. The games run on servers on the Internet and are only transferred to users’ devices. Microsoft is already strong in the business and, as a concession, offered, among other things, to transfer important cloud gaming rights to the games company Ubisoft for 15 years.

Games from Activision-Blizzard will be available in Microsoft’s “Game Pass” subscription service. However, Microsoft won’t be able to publish Activision Blizzard games exclusively on its cloud gaming service.

Microsoft’s commitment to continue offering Activision games for rivals’ consoles and cloud gaming services will likely hurt Xbox sales, but in the long run it will likely bring in more cash from game sales and revenue from subscription and cloud gaming services.

Takeover crime ends after 20 months

Microsoft and Activision Blizzard announced the deal worth approximately $69 billion in early 2022. The purchase, which has now been completed, was preceded by a twenty-month battle with competition authorities in the US and Europe. The US competition authority FTC sued over the deal in December 2022, but lost in a US court. Microsoft rival Sony previously lobbied heavily against the takeover.

The FTC was convinced that the deal would give Microsoft too much market power in the video game sector. However, the responsible judge in San Francisco saw no evidence “that this merger could significantly harm competition in this specific sector of the economy. “To the contrary, the available evidence suggests that consumers have increased access to Call of Duty and other Activision content,” she said. The deal “might be bad for Sony. But good for ‘Call of Duty’ players and future players,” the judge said.

The judge was not convinced that the deal would allow Microsoft to dominate the console market: Microsoft sells significantly fewer game consoles worldwide than Sony or Nintendo.

The European Commission’s competition watchdogs approved the takeover in May under certain conditions. EU Competition Commissioner Margrethe Vestager said Microsoft’s commitment not to exclude players from other platforms from current and future Activision Blizzard games over the next decade would have “significant pro-competitive effects”. Microsoft has “completely removed competition concerns,” the European Commission said in a statement.

In total, regulators in more than 40 countries have approved the deal in recent months.

Activision Blizzard is a gaming company based in Santa Monica, California. The American company was formed in 2008 from the merger of publisher Activision with Vivendi Universal Games and is considered the market leader in the computer and video games sector based on turnover.

With material from the news agencies SDA, AWP and DPA.