Microsoft: competition authorities are investigating Activision’s record takeover

The Federal Trade Commission (FTC), which is responsible for monitoring anti-competitive practices and especially monopolistic positions in the United States, announced in December that it had blocked Microsoft’s takeover bid for Activision, just over a year ago. At $68.7 billion — a large Twitter and a half — it would be the largest acquisition in the history of new technologies.

That’s why this Tuesday marks the first court hearing between the FTC and the digital giant, which still hopes to complete the transaction next summer. For its part, the European Commission launched an investigation before issuing its opinion on the deal.

Microsoft unexpectedly encountered two

It was the Xbox division dedicated to video games and Microsoft’s eponymous console, and it was supposed to absorb Activision Blizzard, the largest developer and publisher of video games in the United States, in particular its owner. Call of Duty, World of Warcraft Where Candy Crush Saga. Despite the size of the acquisition, Microsoft did not expect to face opposition from regulators. They actually worry very little about vertical integrations, as here: a console manufacturer buys a video game publisher. It is often horizontal ventures that involve taking over a direct competitor that create monopoly risks.

But Microsoft faced two unexpected events. Lina Khan, who was appointed last year by the Biden administration to lead the FTC and is the well-known author of “The Amazon Antitrust Paradox,” is a supposed defender of Gafam’s expansion policy, which she knows well. “Today, we are trying to prevent Microsoft from taking control of a leading independent game studio and using it to harm competition in several dynamic and growing gaming markets.” assured the US regulator.

For its part, Sony, the maker of the PlayStation and Microsoft’s main competitor in the home console segment, began lobbying intensively to prevent this takeover. The Japanese giant makes a lot of bets every year call of duty to sell pallets of consoles and fears that the game will become an Xbox exclusive. Xbox division boss Phil Spencer has done his best to quell the controversy: he is proposing to include ten years of non-exclusivity in the sales agreement, noting that his company may have bought it. Minecraft In 2014, the game was never saved for Microsoft platforms. Contrary to what its Japanese competitors do, it denounces the American giant in its response to the FTC: “In addition to acquiring completely exclusive content, Sony is entering into negotiations with third-party publishers, which will involve removing Xbox from the list of platforms on which developers can publish their games.”

Towards the “netflixization” of video games

And indeed, this strategy doesn’t seem like Microsoft’s strategy, which aims to “netflix” more video games. With multiple development studios and successful licenses to its name, the company wants to expand the content offered on Xbox Game Pass, available on consoles and PC, and offers access to a large library of video games. Microsoft firmly believes this, and the numbers for 2021 prove it, with a turnover of more than 25 million subscribers close to 3 billion, while Sony remains conservative, betting on high-priced exclusives. No doubt the number of Game Pass subscribers is one of the goals used to calculate Microsoft’s CEO’s annual performance bonus.

This record purchase should be compared to Amazon, which offered MGM studios this year (James Bond, Rocky…) To extend your Prime Video subscription. The acquisition would be a way for Microsoft to enter the mobile world through the back door after its failure in the smartphone market with Windows Phone. Because Activision has it in the hood candy crush, While there are only 200 million homes equipped with game consoles, 273 million people still play every month.

About 10,000 Activision employees are therefore being left out. They are not in an ideal situation as they are poorly paid and subject to stressful work cycles… The state of California also filed a complaint against the publisher in mid-2021, based on a two-year investigation. , and blamed the company. allows the “boys club” and “sexual harassment” culture to continue.

In an open letter, several hundred employees even demanded the resignation of the CEO, who was accused of condoning these behaviors and protecting their authors. After the purchase offer, the head of the Xbox division made an open appeal to them: “We recognize the need for these workers to feel safe, listened to and properly paid for a job well done.” Phil assured Spencer.

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