Xbox and Microsoft have been dominating the news in recent weeks and months, with their now infamous acquisition of Activision/Blizzard a regular talking point, usually for whatever the latest stumbling block might be.
Most recently it hit the news that the CMA (Competition and Markets Authority) in the UK had blocked Xbox and Microsoft’s acquisition, meaning they couldn’t complete the purchase and continue to trade in the UK afterwards. This was considered a killing blow by many, and with the FTC (Federal Trade Commission) coming to a similar decision in the US, most thought the deal was all but guaranteed to be abandoned and dead in the water.
However, this seems to be the least likely scenario as it stands. Countries around the world are beginning to approve the merger, and with fewer obstacles in the way of the deal it appears Xbox and Microsoft may well take some extreme action to push the deal through.
Xbox and Microsoft – Big Risk, Big Reward?
If you’ve managed to avoid all of the news surrounding this acquisition in the last few months since the story broke, Xbox and Microsoft started the ball rolling on purchasing the gaming powerhouse that is Activision Blizzard for a reported fee of $68.7billion. With both Sony and Microsoft seemingly throwing money at every AAA developer and publisher available, this particular purchase shocked video game fans around the world, and immediately people far more qualified than us began to study the deal and how it would affect the wider market, both financial and video game markets alike.
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Many have found it to be a fine deal, with no real advantage given to Xbox and Microsoft, and no monopoly over the video game market afforded them. Others, primarily the FTC and the CMA have decided that the merger allows too much control, too much of a market share and would adversely affect competition in the video game market, and as such the CMA have denied the merger completely, whilst the FTC have started legal proceedings to thwart the merger in the US.
As it stands, Xbox and Microsoft could choose to ignore these rulings, however, it would mean they would have to pull all Activision Blizzard products off the market in these two countries. Whilst the ruling in the US is likely to be changed and/or legally forced through, the UK ruling from the CMA is much more steadfast and difficult to get around, hence the supposed consideration that Xbox and Microsoft are now considering.
With the likes of Call of Duty relying on the UK to a huge extent for a portion of its sales, this is not a lightly-taken solution, and one that’ll seriously harm any long-term profitability of the merger, so take this outcome with a pinch of salt. Another proposed solution would be for Xbox and Microsoft to essentially ignore the CMA’s ruling, which would allow them to force the merger through, still sell Activision Blizzard products, but it would open them up to future lawsuits from the CMA, something that would surely happen as the CMA wouldn’t take such flagrant disregard to their rulings very lightly.
Whatever happens and whatever direction this whole ordeal goes, it isn’t likely to end any time soon. What’s your opinion on the whole debacle?
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