MICROSOFT’S ACQUISITION OF ACTIVISION BLIZZARD: A CASE STUDY BY ANIVARTH PARTHASARATHY
In January 2022, Microsoft announced its intention to acquire gaming company Activision Blizzard at a valuation of $68.7 billion, or $95 per share. This would become the largest deal in gaming history and one of the most expensive technology acquisitions ever. It was a strategic attempt to expand Microsoft's presence in the gaming industry and strengthen its Xbox Game Pass subscription service by adding household-name franchises like Call of Duty, World of Warcraft, and Candy Crush to its library.
At the time of the announcement, Activision Blizzard was dealing with multiple scandals involving workplace harassment, discrimination lawsuits, and a declining public reputation. Microsoft’s offer allowed shareholders a good payout and Activision leadership a potential fresh start under new ownership. But this deal also raised legal red flags across the globe, triggering antitrust investigations in the United States, United Kingdom, and European Union. For nearly two years, corporate lawyers, regulators, and executives battled over whether the deal would suppress competition in the gaming and cloud streaming markets.
In October 2023, after a series of court victories, structural concessions, and global negotiations, Microsoft successfully closed the deal. But the road to that closing provides a clear window into the legal complexities and ethical implications of corporate mergers on a global scale.
THE LEGAL ISSUES
At the heart of the deal were widespread concerns over anticompetitive behavior. Regulatory bodies such as the U.S. Federal Trade Commission, the U.K.’s Competition and Markets Authority, and the European Commission investigated into whether the merger would give Microsoft too much market power in the gaming industry. The FTC filed a complaint arguing that Microsoft could foreclose access to key franchises like Call of Duty for rival platforms, violating Section 7 of the Clayton Act. Microsoft countered these claims by signing licensing agreements with Nintendo and Sony to maintain game availability across platforms.