Any time a deal reaches the magnitude of the Activision-Blizzard sale, it invites a whole plethora of legal questions. The massive dollar figure ($68.7 billion), coupled with concerns about diminished competition, now has all of us wondering whether this deal will satisfy U.S. regulators in its current form. Luckily for Microsoft, the early indications are that it will.
Activision-Blizzard is the fifth largest publisher in North America and possesses the largest share of the worldwide esports market. Microsoft absorbing Activision-Blizzard is viewed as a “vertical merger,” meaning the blending of the two companies that provide different services in the production chain. In contrast, when two rivals join forces, it’s called a “horizontal merger.”
The Federal Trade Commission and the Department of Justice will assess how the deal, which isn’t expected to close until 2023, would affect commerce in the United States. Either agency, under federal antitrust law, can attempt to block a proposed merger or acquisition if it would substantially lessen competition, which can harm consumers through increased prices, limited choices, or diminished incentives for innovation.
Mindful of federal scrutiny, Microsoft has attempted to dispel worries of diminished competition. Microsoft insists that even with acquiring Activision-Blizzard, it would trail Tencent and Sony as the third-largest gaming company in the world. The company further emphasizes that Apple and Google, not Microsoft, distribute mobile games and are paid by consumers for those games.
Microsoft adds that it has “no intention” of removing games from other platforms, a pledge meant to reassure not only PlayStation gamers but federal regulators, too. Meanwhile, it’s estimated that Microsoft’s acquisition of Activision Blizzard would significantly boost the company’s share of the gaming market, though still only from 6.5% to 10.7%. Microsoft insists it partakes in a “diverse and fragmented”—and, by inference, competitive—market where innovation and prices wouldn’t be adversely impacted by the acquisition.
(All information was provided by Yahoo! Sports)