Acquisitions are one of the most popular methods to increase business growth through diversification. In January 2022, Microsoft announced that it was buying Activision Blizzard Inc for 68.7 billion USD, the biggest deal in its history (Sharma 2022). Given that Microsoft is predominantly a software and electronics company, buying Blizzard will significantly accelerate its growth in the lucrative video game industry. It will increase its strategic competitiveness against Sony’s Playstation by adding popular games such as Candy Crush, Call of Duty, and World of Warcraft to the Microsoft Xbox subscription service. Furthermore, Blizzard’s existing platform could be used to expand the metaverse, the three-dimensional virtual world widely regarded as the future of technology. These changes will enable Microsoft to maintain its market position against other industry giants such as Sony, Amazon, and Apple.
However, antitrust concerns are the most critical in the global economy and could affect the acquisition’s success. The Federal Trade Commission and the Department of Justice announced that they were launching a review of the transaction within hours of the announcement (Sharma 2022). Microsoft is already under scrutiny in the European Union, which has stricter antitrust laws than the U.S. Moreover, news outlets and consumers have expressed concern about the inability of independent studios or solo game developers to compete with the technology giant after the merger (Austin 2022).
Given Microsoft’s size and market power, the monopoly allegations were inevitable. The only line of defense they have is the one they are currently using, which is citing that it will remain only the third biggest video game company even after the acquisition. Microsoft has generally avoided antitrust censure compared to other tech companies, and if the merger finalizes, it will have significantly increased its strategic competitiveness.
References
Austin, Patrick Lucas. 2022. “Microsoft buying Activision Blizzard might be good for gamers, but bad for developers“. Time. Web.
Sharma, Rakesh. 2022. “Microsoft’s (MSFT) Activision Blizzard (ATVI) acquisition: What happens next?” Investopedia. Web.