Will Tech’s Biggest Merger Succeed?


In January of 2022, technology giant Microsoft announced that it would pay $68.7 billion to acquire Activision Blizzard, the publisher of popular game franchises Call of Duty, World of Warcraft, and Candy Crush.[1] The acquisition is an all-cash deal set to be completed in June of 2023.[2] Activision shareholders will have the option to convert shares and will be entitled to receive about 24 percent above market price for their Activision shares.[3] This marks the biggest takeover to ever occur in the technology and gaming sectors.[4] However, the pending acquisition has recently drawn regulators’ attention, rendering the success of the deal uncertain.[5] Both the Federal Trade Commission (FTC) and European regulatory authorities have casted doubt on whether the deal complies with antitrust regulations.[6]

Applicable Antitrust Laws

In the United States, antitrust laws are in place to protect competition for the benefit of consumers, making sure that businesses have incentives to operate efficiently and are producing high quality products while keeping prices low.[7] Specifically, the Clayton Act prohibits mergers and acquisitions where the effect “may be substantially to lessen competition, or to tend to create a monopoly.”[8] Under this law, Microsoft’s pending acquisition of Activision has come into question.[9]

Antitrust violations are also monitored outside the United States. In the United Kingdom, the Competition and Markets Authority (CMA) investigates unfair behavior in order to promote competitive markets.[10] When investigating mergers, the CMA specifically looks to whether mergers have the possibility of reducing competition substantially.[11] The European Union also has an antitrust policy, developed from Articles 101 and 102 of the Treaty on the Functioning of the European Union.[12]

Investigation Into Microsoft / Activision Deal

The Activision Blizzard acquisition is being investigated by antitrust authorities in both the United States and Europe.[13] The FTC filed a complaint against Microsoft and Activision on December 8, 2022, alleging antitrust law violations.[14] The FTC, a regulatory agency in the United States, is seeking to block the acquisition because it believes that the acquisition is anticompetitive.[15] Microsoft, known for producing the Xbox, is one of the world’s largest gaming console producers.[16] Activision is one of only a few companies that produces high-quality video games for multiple devices.[17] If the transaction were to proceed, the control over Activision’s game franchises would allow Microsoft to harm competition by manipulating pricing, functionality, and terms of use.[18] Microsoft could degrade Activision’s game quality on consoles that rival Microsoft’s and could make access to Activision’s content restrictive.[19] This would ultimately harm consumers.[20] The FTC also claims that, in the past, Microsoft has suppressed competition from rivals by acquiring and using valuable gaming content.[21]

Outside of the United States, this deal has also faced controversy. The United Kingdom’s CMA investigated the potential transaction and concluded that the deal could strengthen Microsoft’s market position and ultimately harm gamers who cannot afford expensive gaming consoles.[22] Additionally, the European Commission is preparing documentation that will detail its concerns about the deal.[23]

In addition to regulators that have weighed in on the legality of the acquisition, other entities in the gaming space have also shared their opinions.[24] Other popular gaming companies are generally divided on whether Microsoft’s acquisition of Activision Blizzard would harm competition within the gaming space.[25]


     What could be a historic deal in the gaming and technology industry may not proceed because of antitrust laws and regulations. In the coming months, regulators will either successfully block the deal or allow the deal to go through, which would give Microsoft the power to essentially take over an entire industry.

[1] Mark Sweney, Microsoft to buy Call of Duty Maker Activision Blizzard for Nearly $70bn, Guardian (Jan. 18, 2022, 9:28 AM), https://www.theguardian.com/technology/2022/jan/18/microsoft-buy-call-of-duty-activision-blizzard-world-of-warcraft.

[2] Id.; Shaun Pruitt, Time to Buy Activision Blizzard (ATVI) Before Potential Microsoft (MSFT) Acquisition?, Nasdaq (Jan. 3, 2023, 8:17 PM), https://www.nasdaq.com/articles/time-to-buy-activision-blizzard-atvi-before-potential-microsoft-msft-acquisition.

[3] Pruitt, supra note 2.

[4] Sweney, supra note 1 (explaining that the Microsoft deal “is the biggest deal in tech history, eclipsing the $67bn paid by Dell to buy the digital storage giant EMC in 2015”).

[5] See FTC Seeks to Block Microsoft Corp.’s Acquisition of Activision Blizzard, Inc., Fed. Trade Comm’n (Dec. 8, 2022), https://www.ftc.gov/news-events/news/press-releases/2022/12/ftc-seeks-block-microsoft-corps-acquisition-activision-blizzard-inc [hereinafter FTC Press Release].

[6] Id.; Kelvin Chan, Microsoft’s Activision Blizzard Deal Will Hurt Gamers, UK Antitrust Watchdog Says, PBS (Feb 8, 2023, 2:48 PM), https://www.pbs.org/newshour/economy/microsofts-activision-blizzard-deal-will-hurt-gamers-uk-antitrust-watchdog-says.

[7] The Antitrust Laws, Fed. Trade Comm’n, https://www.ftc.gov/advice-guidance/competition-guidance/guide-antitrust-laws/antitrust-laws (last visited Mar. 2, 2023).

[8] Id.

[9] Claire Jackson, Gamers are Suing Microsoft to Thwart its Merger with Activision, Kotaku (Dec. 20, 2022) https://kotaku.com/microsoft-activision-merger-lawsuit-ftc-call-of-duty-1849917017.

[10] About Us, Competition & Mkts. Auth., https://www.gov.uk/government/organisations/competition-and-markets-authority/about (last visited Mar. 2, 2023, 12:58 PM).

[11] Id.

[12] Antitrust, European Comm’n, https://competition-policy.ec.europa.eu/antitrust_en (last visited Mar. 2, 1:02 PM).

[13] FTC Press Release, supra note 5; Foo Yun Chee, Microsoft Faces EU Antitrust Warning Over Activision Deal – Sources, Reuters (Jan. 17, 2023, 6:28 AM), https://www.reuters.com/technology/microsoft-faces-eu-antitrust-warning-over-activision-deal-sources-2023-01-16/.

[14] FTC Press Release, supra note 5.

[15] Id.

[16] Id.

[17] Id.

[18] Id.

[19] Id.

[20] Id.

[21] Id.

[22] Kelvin Chan, Microsoft’s Activision Blizzard Deal Will Hurt Gamers, UK Antitrust Watchdog Says, PBS (Feb 8, 2023, 2:48 PM), https://www.pbs.org/newshour/economy/microsofts-activision-blizzard-deal-will-hurt-gamers-uk-antitrust-watchdog-says.

[23] See Chee, supra note 13.

[24] See Christopher Dring, Three Xbox Rivals Believe the Activision Blizzard Merger Would Harm Competition, GamesIndustry.biz (Feb. 16, 2023), https://www.gamesindustry.biz/three-xbox-rivals-believe-the-activision-blizzard-merger-would-harm-competition.

[25] Id.


About Author

Comments are closed.

Fordham Journal of Corporate & Financial Law