Microsoft's deal to buy Activison/Blizzard for $67 billion - likely to happen, few obstacles left

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UnknownSouljer

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UPDATE 4:
https://arstechnica.com/gaming/2023...n-case-shows-us-regulator-isnt-giving-up-yet/

FTC appeal in Microsoft/Activision case shows US regulator isn’t giving up yet​

But stopping the deal from moving forward still looks like an uphill battle.

BBC Comentary



UPDATE 3:
https://arstechnica.com/?p=1923472

Sony explains why it wants the merger blocked: they don’t trust Bethesda.

Even if the CMA tried to enforce a so-called "behavioral remedy" to keep Call of Duty multi-platform, that move would not "address the myriad ways Microsoft could circumvent its obligations," Sony wrote. Sony also said Microsoft has a "history of non-compliance with behavioral commitments," pointing to Bethesda as well as previous broken commitments regarding Windows and Internet Explorer.
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and
In its own filing with the CMA, Microsoft noted once again that it "has no intention of... making Call of Duty exclusive to the Xbox platform" and that its proposed agreements with Sony would mean the PlayStation versions would match those on Xbox "on release date, content, features, upgrades, quality, and playability." Microsoft proposed a monitoring trustee, an objective third-party assessor, and a fast-track dispute-resolution mechanism to help enforce those promises.

For Sony, though, it seems there is no enforcement regime or set of magic words that will make the company trust and accept Microsoft's ownership of Activision and Call of Duty. The only solution that Sony would accept is one proposed by the CMA itself: Microsoft fully divesting the Activision or Call of Duty businesses post-acquisition. The CMA is set to make its final decision on the matter by April 26.
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UPDATE 2: Turns out the FTC is also blocking the merger now.

https://www.ign.com/articles/ftc-xbox-playstation-activision-blizzard-cma-merger-analysis

The FTC’s argument against Microsoft is that by acquiring Activision Blizzard it would “substantially lessen competition” in the “relevant market,” per antitrust law as laid out in the Clayton Act. Effectively, the FTC believes that if Microsoft absorbed Activision Blizzard, their combined powers would allow them to monopolize the games market and hurt potential competitors like Nintendo or Sony in ways they couldn’t reasonably compete with.
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https://mspoweruser.com/microsoft-t...erger-offer-remedies-at-eu-hearing-next-week/

UPDATE: Microsoft to propose remedies to the EU Commissions in private meeting.

So, the merger was stopped cold in its tracks by the EU commission, Microsoft is obviously trying to do what they can do to salvage it.


https://www.gov.uk/government/news/microsoft-activision-deal-could-harm-uk-gamers

"A CMA investigation has provisionally concluded that Microsoft's proposed acquisition of Activision could result in higher prices, fewer choices, or less innovation for UK gamers," says the regulator in a press release. "[This follows] a wide-ranging investigation conducted over the last five months to understand the market and potential impact of the deal."
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"This has included holding site visits and hearings to hear directly from business leaders at Microsoft and Activision," it continues, "analyzing over 3 million internal documents from the two businesses to understand their views on the market, commissioning an independent survey of UK gamers, and gathering evidence from a range of other gaming console providers, game publishers, and cloud gaming service providers."
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Part of the problem for mega-corps is that they have to go through multiple international bodies. It was almost a certainty that Microsoft wouldn't be able to pass scrutiny from all the international bodies necessary for the merger. I'm not a corp expert/lawyer, but I would assume that it's impossible or near impossible for Microsoft to continue with the merger now.

My commentary is: the only remaining move(s) might be to buy parts or studios/IPs, but not necessarily all of it. The best gamers can hope for is Blizzard breaks off and becomes independent again and Sony/Microsoft split-up and buy the rest (with perhaps other big companies buying parts like Square-Enix, or Ubisoft, or whatever). It's likely that Activision/Blizzard still wants to sell. Their market is up, their IP is as valuable as it can be, but their management sucks. Better to sell out now before they crash the ship. That was ultimately the big thing that Microsoft would've given them, which was getting rid of poor management (and money, but the business itself obviously makes money).

If you didn't catch the initial announcement/discussion, here is the previous forum thread on the subject relating to when Microsoft started the process of attempting to obtain Activision/Blizzard: https://hardforum.com/threads/microsoft-to-buy-activision-blizzard.2017006/

(Edits are: spelling/grammar, not content)
 
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Once you get to the point where you operate across the globe, it does sound like a tough barrier to overcome.

You have to gain regulatory approval from each market you operate in, and chances are at least one of them is going to have an issue, and then you have to decide if it is worth leaving that market to complete the merger, or not.

I tend to think that media consolidation, which includes the consolidation of game studios and publishers is an overall negative for the market. Time and time again, the best titles always comes from the small guys.

I mean, I can look back 25 years, and almost without exception this is true. If the game was good it came from a small company, independent developers or a relatively new player.

Some of the best and most influential games of the last 25 years were:
  • 1998 - Half Life (Created by Valve when they were still a small startup developer)
  • 1999 - Counter-Strike (Created as a mod by Minh "Gooseman" Le and Jess Cliffe)
  • 2000 - Deus Ex (Created by a relatively young and small Ion Storm before being acquired by Eidos Montreal)
  • 2004? - Red Orchestra (Created as an UT2003 total conversion mod by a small team of enthusiasts before later founding a company to carry the franchise forward)
  • 2007 - S.T.A.L.K.E.R Series (Created by a smallish and newish Ukrainian company, GSC Game world which while they had been around for 12 years had only previously released small titles and Cossacks)
  • 2008 - Fallout 3 (Bethesda may be a juggernaut today, but when the breakthrough Fallout 3 came out, they had only been around for 6 years and were still a small to medium studio.)
  • 2010 - Metro 2033 (Created by a small, and relatively new Ukrainian studio, 4A Games)

There are - of course - some exceptions here, but I can only think of two off the top of my head:

  • 2008 - Far Cry 2 and on (Ubisoft is a big lumbering giant that has been around forever. And while the first 3 "open world" versions of Far Cry (2, 3 and 4) were relatively interesting, they have fallen into the hole of increasingly boring sequels as time has gone on.
  • Sid Meier's Civilization. (They may have been small by modern standards when Civ was first released in 1991, but they were quite a presence in the PC games market then. 2K/Firaxis keeps the series alive and relevant, but maybe not to the same extent as in the early years)


Bigger studios spend big money on licensing film/TV IP for their titles (which almost always results in bad games, yet somehow still make money because people buy them just because of name recognition or because they liked the movie.) or just like the film industry they just make endless boring sequels instead of coming up with anything new because the risk of flopping on a big gamble is worse than almost guaranteed mediocre sales.

I'm a firm believer in keeping business small. Market share almost doesn't matter to me. Even if they have less than 1% of the market, if they are bigger than a certain size, just break them up. In the history of mergers and acquisitions they just about never work out for the customer, and our entire capitalistic economic system is based on competing businesses maximizing benefit to the consumer at the expense of profits. This only works if business is small.

Some industries require a certain level of critical mass in order to make things work. I'm thinking automotive, aerospace etc. Industries where you have to be at a certain scale to be able to take on the task at hand. You aren't going to launch the next Boeing 747 as a 50 person startup. Those industries aside though, I say we just go all in. Just ruthlessly break up anything that gets big. You start getting over $100M in annual revenue? Chopping block awaits.
 
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Zarathustra[H] said:
  • 2008 - Fallout 3 (Bethesda may be a juggernaut today, but when the breakthrough Fallout 3 came out, they had only been around for 6 years and were still a small to medium studio.
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Oblivion was a huge release in 2006 - this one belongs in the exceptions.

I hear you, though.

Edit: BethSoft was founded in 1986.
 
It probably doesnt help Activision/Blizzard has been earning itself a nasty reputation, as-if the company were trying to get the 'most evil company' award for 2023.
 
Zarathustra[H] said:
Once you get to the point where you operate across the globe, it does sound like a tough barrier to overcome.

You have to gain regulatory approval from each market you operate in, and chances are at least one of them is going to have an issue, and then you have to decide if it is worth leaving that market to complete the merger, or not.

I tend to think that media consolidation, which includes the consolidation of game studios and publishers is an overall negative for the market. Time and time again, the best titles always comes from the small guys.
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The EU is starting to be the roadblock for American companies in mergers. Even if its primarily a American multinational company taking over another American multinational in an M&A, the EU seems to block a lot of them. Some good some bad, but they are damn hypocrites because they don't block their own mergers.
 
Meanwhile, Nintendo and Sony lock in their user bases with exclusive titles as a business model... Yet Microsoft, having already demonstrated that they have no intention of operating that way, have doors closed on them...
 
GoldenTiger said:
Yeah, then they can start wow back up in China! /s
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Funny thing Tencent is looking to move themselves out of China, the regulation and requirements there are choking their profits hard and they are looking to get out as fast as they can.
 
UnknownSouljer said:
I think pretty much all US regulators would put a stop to that (thankfully). I know this is a tongue in cheek joke, but that really would be one of the worst possible outcomes.
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They only look where they are paid to look, Tencent, Google, Sony, and Netease were the ones backing most of the lobbyists who were engaging with the regulators.
Tencent is partnered with all of them heavily, if Tencent were to try a buy out the only party who would oppose would be Microsoft, but regulators couldn't take any Microsoft complaints on the matter seriously as they would look to be a sore looser just being butthurt on the failure of their multibillion-dollar deal.
If Tencent made a move to purchase them, there would be very little serious opposition that couldn't be washed away with some "they are being anti China" rhetoric.
 
Centauri said:
Meanwhile, Nintendo and Sony lock in their user bases with exclusive titles as a business model... Yet Microsoft, having already demonstrated that they have no intention of operating that way, have doors closed on them...
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Microsoft gets told they aren't allowed to do a lot of things because it is anti-competitive only for somebody else to do it, make a crap load of money at it then mock Microsoft for their failed attempt like they somehow were doing it better all along.
I suppose that is sort of the point of the laws though they are there to prevent Microsoft from using its entrenched position to steamroll everybody else, but at the same time is it fair to deny Microsoft the opportunity to do these things and expand their divisions?
Oh well, they could always just hire the staff they need with the skillsets from those companies and develop a competing IP using the brain talent, that is assuming Acti/Blizz doesn't have all those staff members on non-compete clause contracts then that gets tricky as hell unless the attempts to invalidate them succeed.
Either way, these are rich people's problems, not mine.
 
Maybe it's not dead.

https://twitter.com/Xbox_Series_XS/status/1623341321925672963

Alleged internal email from Bobby Kotick this morning:

FodEU4cWIAEfsLX?format=jpg&name=large.jpg
 
Centauri said:
Meanwhile, Nintendo and Sony lock in their user bases with exclusive titles as a business model... Yet Microsoft, having already demonstrated that they have no intention of operating that way, have doors closed on them...
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Wut? Does Since when does MS release their games on Sony and Nintendo studios? 1st party games are paid for and developed by a company that owns them to sell their system. Not someone else's. Lots of Sony studios are home grown and not brought up like MS.
 
vegeta535 said:
Wut? Does Since when does MS release their games on Sony and Nintendo studios? 1st party games are paid for and developed by a company that owns them to sell their system. Not someone else's. Lots of Sony studios are home grown and not brought up like MS.
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🤜
 
Zarathustra[H] said:
  • 2007 - S.T.A.L.K.E.R Series (Created by a smallish and newish Ukrainian company, GSC Game world which while they had been around for 12 years had only previously released small titles and Cossacks)
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Cossacks sold 2.5 million units in total in the early '00s. That isn't small by any means. But you're right in that they didn't hit that magic again until S.T.A.L.K.E.R. came out.
Zarathustra[H] said:
  • 2008 - Fallout 3 (Bethesda may be a juggernaut today, but when the breakthrough Fallout 3 came out, they had only been around for 6 years and were still a small to medium studio.)
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Bethesda Softworks has been around since 1986, or 22 years by the time Fallout 3 was released. It was their 34th game made. Bethesda Game Studios was just the new name for the development studio when Bethesda Softworks became the name of the publishing brand when Bethesda's founders created ZeniMax.
 
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vegeta535 said:
Wut? Does Since when does MS release their games on Sony and Nintendo studios? 1st party games are paid for and developed by a company that owns them to sell their system. Not someone else's. Lots of Sony studios are home grown and not brought up like MS.
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Which gaming IP has MS purchased and then platform-restricted?

Which gaming IP has MS purchased and then broadened the availability of? Basically all of it.
 
Centauri said:
Which gaming IP has MS purchased and then platform-restricted?

Which gaming IP has MS purchased and then broadened the availability of? Basically all of it.
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You think they won't keep Bethesda games exclusive that aren't contracted obligated to release on Sony system before the buy out?
 
vegeta535 said:
You think they won't keep Bethesda games exclusive that aren't contracted obligated to release on Sony system before the buy out?
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I feel like you haven't followed any of this story, the concessions Microsoft has already made or things they've already committed to/not-to.
 
vegeta535 said:
I believe it when I see it.
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But... that's not how law works. 😂 You can't dictate free-market movement on nothing more than conjecture and personal biases.

And you can't punish broken commitments without even allowing the chance for them to be broken in the first place.
 
Centauri said:
Meanwhile, Nintendo and Sony lock in their user bases with exclusive titles as a business model... Yet Microsoft, having already demonstrated that they have no intention of operating that way, have doors closed on them...
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This is a rather amusing claim given that Microsoft not only has numerous console exclusives (Halo, Gears, Forza), but has been making its acquired studios switch to Xbox-only console releases. Obsidian's last multi-platform release was The Outer Worlds — every title announced since has been limited to Xbox platforms and Windows PCs.

Microsoft isn't promising Call of Duty on PlayStation for a certan number of years out of the goodness of its heart. It's doing that both because regulators insist and because it'd be foolish to immediately cut off a large source of franchise revenue. The ultimate goal is to make COD an Xbox exclusive; it's just going to take a while before that happens, and Microsoft will likely use interim tactics to prioritize its platform (say, releasing Xbox-only DLC or shipping the Xbox version first).

And folks seem to forget that Microsoft is infamous for its "embrace, extend, extinguish" strategy: it enters a multi-platform market under the guise of making it stronger, introduces proprietary aspects and products, and then tries to elimiinate all competition using those proprietary products. The company in the pre-Nadella era tried to do that with HTML and Linux. And while Microsoft is a better corporate citizen today, it still has a tendency to see acquisitions as ways to silence competition rather than bolster its products. Buying Activision Blizzard and other studios is about taking major games away from other platforms so that you have to buy an Xbox to keep playing them.
 
It will probably happen eventually, but it's going to take some negotiation and some concessions.

Or a series of clever "donations" to the right campaigns.
 
DPI said:
Windows would like a word
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Exactly. There's a weird revisionist history going on where folks act as if Microsoft is a grassroots hero fighting eeeeeevil proprietary companies like Sony, Nintendo and Apple. Er, no. It may be much friendlier to open source and standardization than in the past, but it still dreams of monopolies; it's just not as ruthless about pursuing them as it was in the '90s and '00s.
 
Aurelius said:
Exactly. There's a weird revisionist history going on where folks act as if Microsoft is a grassroots hero fighting eeeeeevil proprietary companies like Sony, Nintendo and Apple. Er, no. It may be much friendlier to open source and standardization than in the past, but it still dreams of monopolies; it's just not as ruthless about pursuing them as it was in the '90s and '00s.
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Yep. You seen what crap they tried to pull with the Xbox One when they announced it. No doubt in my mind they would try similar crap if they were in the top seat again. They have no choice to be consumer friend since Sony and Nintendo have been eating MS for lunch the past decade.
 
Depends what one mean by console exclusive, I feel like all of those now get a PC release has well ? And I would imagine they would continue in that vain at a minimum, for some massive seller title it a la COD it could even be still available on Sony has well with some Xbox getting earlier release and stuff.

I feel like Xbox exclusive barely exist anymore and not at all if Microsoft is quite involved.
 
vegeta535 said:
Yep. You seen what crap they tried to pull with the Xbox One when they announced it. No doubt in my mind they would try similar crap if they were in the top seat again. They have no choice to be consumer friend since Sony and Nintendo have been eating MS for lunch the past decade.
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And people forget that Microsoft pivoted to its service-oriented strategy under Nadella in no small part because it missed the boat on mobile. It couldn't lean heavily on Windows revenue in a world where most computing devices were running Android or iOS. Steve Ballmer very much wanted to extend Microsoft's PC monopoly to phones and tablets; he just didn't understand that Microsoft's offerings in those spaces were crappy, and that Windows by itself was not a major selling point. If Microsoft had taken the iPhone (and later Android) seriously or preempted it, you could be sure the company would be using strongarm tactics to make life difficult for Apple and Google.
 
Aurelius said:
And people forget that Microsoft pivoted to its service-oriented strategy under Nadella in no small part because it missed the boat on mobile. It couldn't lean heavily on Windows revenue in a world where most computing devices were running Android or iOS. Steve Ballmer very much wanted to extend Microsoft's PC monopoly to phones and tablets; he just didn't understand that Microsoft's offerings in those spaces were crappy, and that Windows by itself was not a major selling point. If Microsoft had taken the iPhone (and later Android) seriously or preempted it, you could be sure the company would be using strongarm tactics to make life difficult for Apple and Google.
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Microsoft now is not the Microsoft of then, they want their services on as much hardware in as many places as possible. They want to become the backbone that allows you to do what you are doing independent of the hardware, software, or location. In a world where consoles are sold at cost or a minor loss, it makes more sense to put your software in as many places as possible.
I mean here is something that most of us never thought we would see.
https://www.phoronix.com/news/Microsoft-DX-Shader-Linux-Build
Microsoft keeps bringing more and more of its parts to Linux, Nadella understands that Microsoft's old strategy was no longer viable long-term and is working to make sure that in a world where most people aren't running Windows, they are still using Microsoft.
 
Lakados said:
Microsoft now is not the Microsoft of then, they want their services on as much hardware in as many places as possible. They want to become the backbone that allows you to do what you are doing independent of the hardware, software, or location. In a world where consoles are sold at cost or a minor loss, it makes more sense to put your software in as many places as possible.
I mean here is something that most of us never thought we would see.
https://www.phoronix.com/news/Microsoft-DX-Shader-Linux-Build
Microsoft keeps bringing more and more of its parts to Linux, Nadella understands that Microsoft's old strategy was no longer viable long-term and is working to make sure that in a world where most people aren't running Windows, they are still using Microsoft.
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Oh, I know — the point is that Microsoft is focusing on services partly because it lost the battle over mobile. It risked fading to irrelevance if it carried on with business as usual. My theory is that Microsoft wouldn't be quite so kind if it had made Windows Mobile/Phone more compelling and kept the market influence it lost to Apple and Google.

The console space isn't the same, of course, but the proposed Activision Blizzard merger reflects that "old" Microsoft thinking: it want to buy its way to the top by limiting choice.
 
Aurelius said:
Oh, I know — the point is that Microsoft is focusing on services partly because it lost the battle over mobile. It risked fading to irrelevance if it carried on with business as usual. My theory is that Microsoft wouldn't be quite so kind if it had made Windows Mobile/Phone more compelling and kept the market influence it lost to Apple and Google.

The console space isn't the same, of course, but the proposed Activision Blizzard merger reflects that "old" Microsoft thinking: it want to buy its way to the top by limiting choice.
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And having lost the battle for mobile they are quickly losing ground in the consumer market, iOS, and Android are just too useful for the average persons day to day, I work in schools, and an exceeding few have PCs at home. But between Google Docs and O365, you would be remarkably surprised at the quality of a document or report they can put together from a cheap tablet or an older phone. For those really hard up I keep a stack of Chromeboxes I can just assign to our managed system and hand out so they can hook it to a TV or an older monitor I can scrounge up. I would not at all be surprised if we have graduating students right now who have never actually used Windows.
 
Zarathustra[H] said:
Some industries require a certain level of critical mass in order to make things work. I'm thinking automotive, aerospace etc. Industries where you have to be at a certain scale to be able to take on the task at hand. You aren't going to launch the next Boeing 747 as a 50 person startup. Those industries aside though, I say we just go all in. Just ruthlessly break up anything that gets big. You start getting over $100M in annual revenue? Chopping block awaits.
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I 100% agree. However, when companies like Microsoft have 80% of Azure being used by government - good luck with that.
 
Centauri said:
Meanwhile, Nintendo and Sony lock in their user bases with exclusive titles as a business model... Yet Microsoft, having already demonstrated that they have no intention of operating that way, have doors closed on them...
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Doubt it. When we see Halo, Gears of War or Starfield on Playstation let me know.

Maybe for the online games like CoD Microsoft would allow that to remain on other platforms. But SP games? Xbox/Windows only.
 
“Less innovation for gamers”

They have a point. If Microsoft buys Activision, we may see creative stagnation as they may just rely on established franchises and, for example, simply release a new Call of Duty game every year, instead of what they do right now which is release a new Call of Duty game every year.
 
HockeyJon said:
“Less innovation for gamers”

They have a point. If Microsoft buys Activision, we may see creative stagnation as they may just rely on established franchises and, for example, simply release a new Call of Duty game every year, instead of what they do right now which is release a new Call of Duty game every year.
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Yup, that is completely different from how Activision Blizzard operates now. Complete sea change.
 
Armenius said:
Yup, that is completely different from how Activision Blizzard operates now. Complete sea change.
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To be fair, they did innovate an incredible pay-to-win microtransaction system for Diablo Immortal, which enable them to siphon money from gamer’s bank accounts at an almost unheard of rate. As a gamer I, for one, am relieved to see the UK stepping in and protecting incredible gaming innovation like this.
 
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