Microsoft's $68.7bn acquisition of Activision Blizzard is under regulatory review in the UK and Brazil, among other jurisdictions. In October, I reported on the EU also starting its own review. Well, the European Commission (EC) following Microsoft's official proposal. Now, the EC says it will begin a formal investigation while at the same time Activision Blizzard remains bullish the merger will be greenlit.
The EC's concerns with the deal seem to be the same issues other regulators and rivals such as Sony have raised.
Sony has been a vocal leader in the backlash against the deal. One of Sony's main concerns is that Microsoft buying Activision Blizzard will create a gaming monopoly. The PlayStation company is not alone, it is a worry shared by many.
Activision Blizzard is behind some of the biggest and most lucrative game franchises, such as Call of Duty, Diablo, Warcraft, and Candy Crush. Many are concerned Microsoft will eventually make these brands exclusive to the Xbox and Game Pass brands.
Microsoft continues to argue it sees more value in these major franchises being available across platforms. Just recently, Microsoft gaming head, Phil Spencer, spoke about how the company is being transparent with regulators.
Even so, the EC is not taking Microsoft's word for it. Instead, the notoriously strict regulatory body is starting a 90-day in-depth investigation. In an announcement, the EC says the review is designed to assess whether Microsoft is could have a monopoly if the deal goes ahead.
Margrethe Vestager, the Executive Vice-President in charge of competition policy, says:
“We must ensure that opportunities remain for future and existing distributors of PC and console video games, as well as for rival suppliers of PC operating systems. The point is to ensure that the gaming ecosystem remains vibrant to the benefit of users in a sector that is evolving at a fast pace. Our in-depth investigation will assess how the deal affects the gaming supply chain.”
The EC now has 90 days to complete the review and will publish its decision on March 23, 2023.
Activision Blizzard Success
The EC's announcement comes just as Activision Blizzard announced its Q3 2022 earnings. According to the company, it took $1.78 billion in revenue, up from its $1.7 billion projection. Speaking about Call of Duty and highlighting why Microsoft is interested in the company, the publisher says the game:
“Set new records for our largest franchise, becoming the fastest premium Call of Duty release to cross $1 billion in sell-through. Sales have been robust across all platforms, including on PC, where unit sell-through to date is approximately twice the level of recent strong titles in the series. Modern Warfare II has set new franchise engagement records for a premium Call of Duty release, with hours played in the first 10 days more than 40% above the prior franchise record.”
Activision CEO Bobby Kotick also moved to ease investor concerns over the regulatory roadblocks currently in place:
“We look forward to continuing to release epic entertainment in service of our global community of players as a part of Microsoft, one of the world's most admired companies. We continue to expect that our transaction will close in Microsoft's current fiscal year ending June 2023.”
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