Category Archives: Microsoft

EU Commission To Approve Microsoft’s Activision Blizzard Acquisition

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EU antitrust regulators are set to approve Microsoft Corp’s $69 billion acquisition of Activision next week, with May 15 as the likeliest date, people familiar with the matter said, Reuters reported.

The European Commission’s imminent clearance comes nearly three weeks after the UK competition authority blocked the deal, the biggest-ever deal in gaming, over concerns it would hinder competition in cloud gaming.

The EU antitrust enforce is expected to clear the acquisition after Microsoft agreed to licensing deal with cloud streaming rivals including Nvidia, Ukraine’s Boosteroid, and Japan’s Ubitus, other people with direct knowledge of the matter told Reuters in March.

It also has an agreement with Nintendo to bring Activision’s Call of Duty to its gaming platforms should the acquisition go through, U.S. distributor Valve Corp, owner of the world’s largest video game distribution platform, Steam, declined a contract saying it trusts Microsoft.

The Commission, which has set a May 22 deadline for its decision, declined to comment.

VideoGamesChronicle reported that the European Commission has confirmed plans to publish its verdict by May 22, and it has previously been claimed that Microsoft’s willingness to offer game licensing deals to rivals is likely to address its antitrust concerns.

According to VideoGamesChronicle, last month, the UK’s Competition and Markets Authority (CMA) said it was preventing the deal due to concerns about its impact on the future of the cloud gaming market.

Microsoft and Activision quickly confirmed their intention to appeal the CMA’s ruling, which the former had called “bad for Britain” and the latter has labeled “irrational”.

Microsoft has reportedly hired a lawyer known for repeatedly defeating the EU regulator in competition cases to lead its appeal against the CMA’s decision.

Windows Central appears to be skeptical about the outcome, and posted a headline titled: “This report says the EU will approve Microsoft’s Activision deal for Xbox, but will it?”

Windows Central wrote: Microsoft is currently in the process of trying to acquire Activision-Blizzard-King, makers of Call of Duty, World of Warcraft, and Candy Crush Saga. The deal has been fraught with regulatory scrutiny, with Sony PlayStation decrying the deal to regulators across the globe.

The UK regulatory arm known as the CMA blocked the deal a few weeks ago, Windows Central wrote, claiming that it would give Microsoft a monopoly in this very, very nascent market – a market in which Microsoft says it can only serve to 5,000 concurrent users in the UK.

In my opinion, anyone who has been paying close attention to the Microsoft – Activision Blizzard acquisition has been on an emotional roller coaster, waiting to see what the various regulators of different countries will decide. I’m hoping the EU antitrust regulators will approve of the acquisition.

Japan’s Competition Regulator Approves Microsoft’s Acquisition

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The Japan Fair Trade Commission (JFTC) has approved Microsoft’s acquisition of Activision Blizzard after its review concluded that the deal was “unlikely to result in substantially restraining competition”, IGN reported.

The JFTC posted: “The JFTC Reviewed the Proposed Acquisition of Activision Blizzard, Inc. by Microsoft Corporation” From the post:

“Receiving notifications regarding the proposed acquisition of Activision Blizzard, Inc, (“Activision Blizzard” headquartered in the U.S.) by Microsoft Corporation (JCN8700159989374) (“Microsoft” headquartered in the U.S.; and Activision Blizzard and Microsoft are hereinafter collectively referred to as the “Parties”), the Japan Fair Trade Commission (hereinafter referred to as the “JFTC”) reviewed the transaction and reached the conclusion that the transaction is unlikely to result in substantially restraining competition in any particular fields of trade. Accordingly, the JTFC has notified the Parties that the JFTC will not issue a cease and desist order, resulting in the completion of its review.

I Overview of the Transaction

The Parties plan the acquisition of Activision Blizzard by Microsoft through the acquisition of shares and the merger.

II Reviewing Process

Receipt of notifications regarding the acquisition of shares and the merger on March 10, 2023 (the start of the phase 1 review)

Clearance notification on March 28, 2023.

III Conclusion

The JFTC concluded that the transaction is unlikely to result in substantially restraining competition in any particular fields of trade.

IGN also reported that the JFTC’s decision not to challenge the merger will come as welcome news to Microsoft as it campaigns to convince regulators in holdout countries, including the United States Federal Trade Commission, that the deal will not harm competition, or increase costs for consumers.

GameSpot reported: The Japan Fair Trade Commission has reportedly closed its review of Microsoft’s attempted purchase of Activision Blizzard, stating the deal won’t suppress competition. In other words, another roadblock has been removed for Xbox to take the reins of Call of Duty, Diablo, and World of Warcraft.

GameSpot also reported that this follows the UK’s Competition and Markets Authority determining that the deal won’t stifle competition in the console space last week. The CMA does have concerns about the area of cloud gaming with the acquisition.

According to GameSpot, The Federal Trade Commission in the U.S. is still scrutinizing Microsoft’s deal with Activision Blizzard, which is valued at almost $70 billion, GameSpot reported. The FTC wants more information on Xbox’s future Zenimax exclusivity, for instance, arguing that the company has gone back on its word to keep games multiplatform.

Reuters reported that the Japan watchdog informed Microsoft and Activision Blizzard it won’t call for a cease and desist of the merger.

Personally, I would like to see Microsoft acquire Activision Blizzard. It feels like this acquisition is taking way longer than it should. Sony is clearly against the acquisition, but it does not make sense to me why that is so – especially now that the JFTC has approved of the acquisition.

Microsoft Gives Sony 10 Years To Develop Call of Duty Alternatives

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Microsoft has said it believes 10 years is long enough for Sony to develop rival offerings to the Call of Duty franchise, VideoGamesChronicle reported.

According to VideoGamesChronicle, regulators in the UK’s Competition and Markets Authority (CMA) have expressed concerns that Microsoft’s $69 billion acquisition of Activision Blizzard could significantly reduce PlayStation’s ability to compete given that it would see Microsoft gain ownership of the Call of Duty series, which Sony has called “irreplaceable.”

In a bid to gain approval for the deal, Microsoft has told regulators it’s willing to make each new Call of Duty game available on the PlayStation the same day it comes to Xbox for a 10-year period, with full content and feature parity. In a newly published document, Microsoft has told the CMA that it believes a decade is long enough for Sony to create alternatives to Call of Duty.

Gamerant reported that while many gaming studios support Microsoft’s acquisition of Activision Blizzard, it’s only natural that the company’s biggest rival wouldn’t be so keen on accepting it. Over the past months, Sony has come up with a whole slew of reasons why the deal should not go through without major changes to, for example, Activision Blizzard’s held IP rights, and Call of Duty is at the center of it all.

According to Gamerant, Microsoft just released a fairly heavily redacted response to the UK’s Competition and Markets Authority on the topic of whether Activision Blizzard should keep Call of Duty, in the event that the acquisition gets greenlit by all the pertinent authorities. One of the most interesting comments Microsoft issued via this document is that the company believes Sony would be more than capable of producing a solid alternative to the Call of Duty franchise over the course of the next ten years.

From the document:

“Microsoft’s proposal is that the remedy will apply for a period of 10 years.

“At the Remedies Hearing the CMA asked Microsoft if the 10-year duration is sufficient and whether there would be a “cliff edge” for Sony at the end of this period. The 10-year period is [redacted]. Microsoft considers that a period of 10 years is sufficient for Sony, as a leading publisher and console platform, to develop alternatives to CoD. The 10-year term will extend into the next console generation [redacted]. Moreover, the practical effect of the remedy will go beyond the 10-year period, since games downloaded in the final year of the remedy can continue to be played for the lifetime of that console (and beyond, with backwards compatibility).”

GameRant also reported that this information should be considered with additional context, of course. Specifically, Microsoft offered Sony a 10-year CoD deal, during which time the franchise would remain available on PlayStation consoles. Sony did not accept it, however, and continued issuing statements in an attempt to put the deal in a negative light with authorities.

The aforementioned document has come as a response to the CMA’s latest Remedies Hearing, where the regulator asked for Microsoft’s input on a number of issues concerning the Activision Blizzard deal.

Sony argues that Xbox’s Call of Duty offer would “irreparably harm competition” in the grand scheme of things.

In my opinion, the best thing that can happen is for the regulators to decide in favor of Microsoft. There are already some games made by Blizzard on Xbox, including the Diablo IV Early Access Beta Weekend, and the upcoming Diablo IV Open Beta. Those same betas appear to be available on PlayStation as well.

Microsoft And NVIDIA Announce Expansive New Gaming Deal

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Microsoft posted “Microsoft and NVIDIA announce expansive new gaming deal” on its Microsoft News Center:

On Tuesday, Microsoft and NVIDIA announced the companies have agreed to a 10-year partnership to bring Xbox and PC games to the NVIDIA GeForce NOW cloud gaming service, which has more than 25 million members in over 100 countries.

The agreement will enable gamers to stream Xbox PC titles from GeForce NOW to PCs, macOS, Chromebooks, smartphones and other devices. It will also enable Activision Blizzard PC titles, such as Call of Duty, to be streamed on GeForce NOW after Microsoft’s acquisition of Activision closes.

“Xbox remains committed to giving people more choice and finding ways to expand how people play,” said Microsoft Gaming CEO Phil Spenser. “This partnership will help grow NVIDIA’s catalog of titles to include games like Call of Duty, while giving developers more ways to offer streaming games. We are incredibly excited to offer gamers more ways to play the games they love.”

“Combining the incredibly rich catalog of Xbox first party games with GeForce NOW’s high-performance streaming capabilities will propel cloud gaming into a mainstream offering that appeals to gamers at all levels of interest and experience,” said Jeff Fisher, senior vice president for GeForce at NVIDIA. “Through this partnership, more of the world’s most popular titles will now be available from the cloud with just a click, playable by millions more gamers.”

The partnership delivers increased choice to gamers and resolves NVIDIA’s concerns with Microsoft’s acquisition of Activision Blizzard. NVIDIA therefore is offering its full support for regulatory approval the acquisition.

Microsoft and NVIDIA will begin work immediately to integrate Xbox PCgames into GeForce NOW, so that GeForce NOW members can stream PC games they buy in the Windows Store, including third-party partner titles where the publisher has granted streaming rights to NVIDIA. Xbox PC games currently available in third-party stores like Steam or Epic Games Store will also be able to be streamed through GeForce NOW.

Visit the GeForce NOW website for more information on the service and follow along every GFN Thursday for the latest news, including release dates for upcoming Microsoft game titles coming to the GeForce NOW service.

The agreement was announced today at a Microsoft press conference in Brussels, Belgium. Microsoft also star today that it finalized a 10-year agreement to bring the latest version of Call of Duty to the Nintendo platforms following the merger with Activision.

CNBC reported that the announcement comes after Microsoft President Brad Smith met with European Union officials on Tuesday in a bid to convince them that its planned $69 billion acquisition of Activision Blizzard will be good for competition.

According to CNBC, Microsoft is offering the olive branch to stop the takeover from being blocked and thereby expand its gaming unit, which represents 9% of its total revenue. Microsoft President Brad Smith said if the Activision deal closes, it will bring all Activision Blizzard titles to GeForce Now.

Personally, as much as I’d love to see Microsoft acquire Activision Blizzard, I’m not entirely certain that the company will be able to appease all of the regulators who have examined this merger. Perhaps the offering of ten years of access to Call of Duty to NVIDIA and Nintendo will convince regulators to reconsider their opinion of the acquisition. In the meantime, I looks as though Microsoft is very confident that the acquisition will go through.

UK’s CMA Rejects Microsoft’s Acquisition of Activision

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UK’s Competition and Markets Authority posted a press release titled: “Microsoft – Activision deal could harm UK gamers”. The press release starts with: 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.

The provisional findings from the Competition and Markets Authority (CMA) follow a wide-ranging investigation conducted over the last five months to understand the market and potential impact of the deal. This has included holding site visits and hearings to hear directly from business leaders at Microsoft and Activision, 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.

Competition in the supply of cloud gaming services

The CMA provisionally found that being able to offer popular games will be important for cloud gaming providers to attract users as the market continues to grow and develop. The evidence available to the CMA currently indicates that Microsoft would find it commercially beneficial to make Activision’s games exclusive to its own cloud gaming service (or only available on other services under materially worse conditions). Microsoft already accounts for an estimated 60-70% of global cloud gaming services and also has other important strengths in cloud gaming from owning Xbox, the leading PC operating system (Windows) and a global cloud computing infrastructure (Azure and Xbox Cloud Gaming).

The CMA provisionally found that buying one of the world’s most important game publishers would reinforce this strong position and substantially reduce the competition that Microsoft would otherwise face in the cloud gaming market in the UK. This could alter the future of gaming, potentially harming UK gamers, particularly those who cannot afford or do not want to buy an expensive gaming console or gaming PC.

Competition in the supply of consoles

The CMA provisionally found that a small number of key games, including Call of Duty (CoD), Activision’s flagship game, play an important role in driving competition between consoles. The evidence available to the CMA, including data on how Microsoft measures the value of customers in the ordinary course of business, currently indicate that Microsoft would find it commercially beneficial to make Activision’s games exclusive to its own consoles (or only available on PlayStation under materially worse conditions). The CMA’s provisional findings note that this strategy, of buying gaming studios and making their content exclusive to Microsoft’s platforms, has been used by Microsoft following several previous acquisitions of games studios.

The CMA provisionally found that weakening competition by restricting the access that other platforms have to Activision’s games could substantially reduce the competition between Xbox and PlayStation in the UK, harming UK gamers.

Xbox and PlayStation compete closely with each other at present and access to the most important content like CoD, is an important part of that competition. Reducing this competition between Microsoft and Sony could result in all gamers seeing higher prices, reduced range, lower quality, and worse service in gaming consoles over time.

There is more in this press release, but I think the key points are listed above. The provisional results are clearly not in Microsoft’s favor.

Phil Spencer Says Sony Wants to Grow At Xbox’s Expense

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Public squabbling between two of the biggest console gaming companies has intensified, Kotaku reported. According to Kotaku, on a recent podcast appearance, Microsoft Gaming CEO Phil Spencer blasted Sony for wanting to grow by “making Xbox smaller.”

The accusation comes after the Federal Trade Commission decided to sue to block Microsoft’s takeover of Activision because of a pattern of making recently acquired games like Starfield exclusive.

VideoGamesChronicle reported that Phil Spencer made the comments during an interview with the Second Request podcast, where the exec claimed that Sony was the “one major opposer to the [Microsoft Activision] deal.”

According to VideoGamesChronicle, Phil Spencer said: “Sony is trying to protect its dominance on the console. The way they grow is by making Xbox smaller,” Spencer said. “[Sony] has a very different view of the industry than we do. They don’t ship their games day and date on PC, they do not put their games into their subscription when they launch their games.”

VideoGamesChronicle also reported that Phil Spencer said “Sony is leading the dialogue around why the deal shouldn’t go through to protect its dominant position on console, so the thing the grab onto is Call of Duty”, Spencer told Second Request. “The largest console maker in the world raising an objection about the one franchise that we’ve said will continue to ship on the platform. It’s a deal that benefits customers through choice and access.”

Forbes reported that Xbox’s head Phil Spencer, normally an industry nice-guy, has had enough with Sony’s relentless protests to regulators over Microsoft’s attempt to purchase Activision Blizzard. These days, the gloves are coming off, and the language he’s using is as sharp as it’s ever been.

According to Forbes, the pushback to Sony’s objections is that they are transparently self-serving, and one argument Microsoft has made is to play up PlayStation’s position as market leader while downplaying Xbox’s position, including their relative lack of first party hits compared to Sony.

Forbes noted that Sony, meanwhile, very much does not want Xbox to get larger by acquiring a company with a market cap dangerously close to the entire size of Sony ($100 billion versus $70 billion). But while there’s an argument to be made about the size of the deal, it’s also pretty apparent that Sony is being obstructionist for its own sake to try and kill something that will benefit their rival and hurt them.

Personally, I don’t think anyone can know, for certain, how the FTC’s lawsuit against Microsoft will turn out. While it does appear that Sony is desperately trying to be the loudest voice against Microsoft’s acquisition of Activision Blizzard, that doesn’t mean a court will have the same opinion as Sony does.

The Ghost Of Instagram Haunts Microsoft’s Future

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The catchy headline at the top of this blog post was the title Reuters selected for its article. It is an ominous sounding title, indicating that Microsoft will have difficulty with the Federal Trade Commission’s (FTC’s) lawsuit against the company.

Reuters reported that Facebook is Microsoft’s antitrust boogeyman. The U.S. regulatory agency, the Federal Trade Commission, is seeking to block the software titan’s $69 billion deal for gaming giant Activision Blizzard, partly to stop domination of the industry as it evolves. The FTC’s leader Lina Khan might be making up for regulators who waved through Mark Zuckerberg’s $1 billion purchase of Instagram. Though Microsoft’s deal is different, punishment under Khan’s regime seemed inevitable.

According to Reuters, the FTC is concerned that Microsoft, the owner of the Xbox gaming console, will withhold popular games made by Activision, including Call of Duty and World of Warcraft from competing platforms including Sony’s PlayStation and Nintendo’s Switch. Microsoft has tried to appease this concern. This month, the company led by Satya Nadella agreed to offer games to Nintendo and Sony for 10 years.

The New York Times posted an article titled: “Lina Kahn, Aiming to Block Microsoft’s Activision Deal, Faces a Challenge”. This is a more optimistic title than the one Reuters chose. The New York Times reported that Lina Khan has pledged to usher in a new era of trustbusting of America’s corporate giants, recently saying the agency plans to “enforce the antitrust laws to ensure maximal efficacy.”

According to The New York Times, Ms. Khan has staked that ambitious agenda on a case that may be highly challenging for the agency to win. Ms. Khan and the FTC face hurdles in trying to stop the Microsoft-Activision deal, experts said. That’s because courts have been skeptical of challenges to so-called vertical mergers, where the two businesses don’t compete directly. In this case, Microsoft is best known in gaming as the maker of the Xbox console, while Activision is a major publisher of blockbuster titles such as Call of Duty.

The New York Times also reported that Microsoft has vowed to fight the FTCs lawsuit against the Activision purchase. On Thursday, Brad Smith, Microsoft’s president, said the company had “complete confidence in our case and welcome the opportunity to present it in court.” On Friday Microsoft pointed to previous statements that it believes the deal would expand competition and create more opportunities for gamers and game developers.

The Wall Street Journal reported that in the typical antitrust case, the government challenges a horizontal merger, or one involving rivals that compete head-to-head. Such mergers, by removing a competitor from the marketplace, can increase concentration, a factor that can be used to infer harmful effects such as higher prices.

According to The Wall Street Journal, the government has struggled to win cases on vertical mergers because making claims about the potential future harms posed by such deals is less straightforward and can require complex speculation about how market forces might play out.

Personally, I think it is going to take a very long time to sort this situation out in court. This is happening during the holiday season, and I cannot help but wonder if gamers who wanted to buy a console will hold off until they know the outcome of the Microsoft – Activision Blizzard acquisition.