Microsoft Set to Aquire Activision Blizzard

Throughout the recent years of the pandemic, industries like video games have skyrocketed in popularity with people being stuck within the confines of their homes.  Whether it was Candy Crush on a phone or Call of Duty at home, the industry as a whole has seen massive growth.  Recently, Microsoft announced its plans to acquire Activision Blizzard for an estimated $68.7 billion.  This deal is set to go through sometime in the fiscal year of 2023.

This acquisition on Microsoft’s part gives enormous potential to the video game sector of their company.  Within the past couple of years, Microsoft released 2 new Xboxes that are still being highly sought after.  Adding Activision Blizzard titles to their repertoire would bolster the longevity of the recently released consoles.

Xbox users have the opportunity to subscribe to Game Pass, exclusive to Xbox users, which provides access to a library of over 100 games allowing unlimited access and playability of the games in the library.  Games that are currently available in Game Pass include the Halo franchise as well as many sports games by Electronic Arts (EA).  When this acquisition goes through, Microsoft looks to add many of the Activision Blizzard games to the Game Pass library.

There are still questions in the air about what this acquisition means for the gaming industry.  Sony’s PlayStation platform, Xbox’s biggest competitor, may not see games that were once available to both platforms.  A French retailer of Xbox and PlayStation consoles posted a notice on store displays that warned consumers to pick their consoles wisely in response to the potential loss of access to some titles.

The competition between the biggest companies in the gaming industry is something that some see as a problem with this acquisition.  The Federal Trade Commission has launched an investigation into Microsoft acquiring Activision.  The investigation is led by Lina Khan, a chairwoman for the FTC, who believes in a stronger review process when looking into massive companies that acquire smaller companies.  Being that Microsoft is one of the largest tech companies in the world they have the strength to grow their business in different sectors.

In a statement regarding the information on merger enforcement Khan said, “While the current merger boom has delivered massive fees for investment banks, evidence suggests that many Americans historically have lost out, with diminished opportunity, higher prices, lower wages, and lagging innovation.” Khan then went on to say, “A lack of competition also appears to have left segments of our economy more brittle, as consolidated supply and reduced investment in capacity can render us less resilient in the face of shocks.”

The main substance behind this investigation lies in the idea that by Microsoft having ownership of Activision Blizzard there will be games that may not be available to Microsoft’s biggest competitors.  There are fears that the biggest gaming franchises ever, like Call of Duty and Warcraft, would strictly be available to Xbox users.  Essentially, this would give something similar to a monopoly to Microsoft because of the magnitude of the franchise having exclusivity to Microsoft products.

While this is a massive acquisition, Activision Blizzard has seen problems in the past year with allegations of sexual harassment and discrimination.  Since July 2021, 37 employees have been fired and another 44 received warnings from the company as a result of the allegations.

Activision Blizzard also faced a multitude of responses due to the practices Activision found itself in.  First, employees of the company staged a walkout of over 100 people on top of over 2,000 employees signing a letter that called the company out for their poor response.  Furthermore, Activision Blizzard faced lawsuits in response to the allegations which eventually was settled for a mere $18 million.

Acquiring a company with a history of discrimination and harassment creates an interesting situation for Microsoft.  Microsoft could bring necessary radical change to Activision Blizzard because the aforementioned allegations are not something a company like Microsoft wants to carry.

With much uncertainty still up in the air about this acquisition, if and when this deal goes through it would be a historical transaction within the tech industry.  Given the power that companies such as Microsoft have in the industry, it is likely that competitors start to make deals with video game developers to solidify their space in the industry.