Antitrust Scrutiny and Concessions: Unpacking Microsoft’s $68.7 Billion Acquisition of Activision Blizzard

February 23, 2024

In the ever-evolving world of gaming and esports, Microsoft’s monumental $68.7 billion acquisition of Activision Blizzard has not only reshaped the industry but also navigated a complex path of antitrust scrutiny. Over the course of nearly two years, the deal underwent rigorous evaluation by regulatory bodies such as The Federal Trade Commission (FTC) in the U.S., the European Commission, and the U.K.’s Competition and Markets Authority.

Understanding Antitrust Concerns

Government antitrust laws are in place to promote fair competition and prevent monopolistic practices within industries. These laws aim to protect consumers and foster innovation by ensuring that no single entity gains excessive market power, stifling competition and limiting choices for consumers. In the context of the gaming industry, these laws become particularly relevant as major acquisitions have the potential to significantly impact the competitive landscape. Objections raised by regulatory bodies to this deal primarily centered around:

  1. Market Dominance: One of the primary antitrust concerns stemming from this acquisition is the potential consolidation of market power. Microsoft, already a major player in the gaming industry, absorbing Activision Blizzard’s extensive portfolio, raises questions about healthy competition. Critics argue that this move could create a near-monopoly, limiting choices for both gamers and developers.
  2. Exclusive Content Control: The regulatory bodies raised objections regarding Microsoft’s potential control over exclusive gaming content. The fear was that this control could create an uneven playing field, potentially favoring Microsoft’s platforms and creating barriers for smaller competitors.

Addressing Concerns: Concessions and Agreements

To address these concerns, Microsoft made several concessions and entered into specific agreements:

  1. Third-Party Access to Platforms: To address concerns about market dominance, Microsoft has agreed to ensure that third-party developers and publishers maintain access to its gaming platforms. This concession aims to preserve a level playing field for developers and prevent the exclusion of competitors from Microsoft’s ecosystem.
  2. Cross-Platform Commitment: Recognizing worries about exclusive content control, Microsoft pledged to support and expand cross-platform gaming. The commitment includes maintaining cross-play functionality, allowing gamers on different platforms to interact seamlessly and mitigating concerns about gaming exclusivity.
  3. Data Access and Privacy Safeguards: Given the vast amount of user data involved, both companies have committed to stringent data access and privacy safeguards. This includes clear policies on how user data will be handled, ensuring that the consolidation of data does not lead to anticompetitive practices or compromise user privacy.
  4. License Agreements for Competing Platforms: Microsoft made specific agreements with Nintendo and Sony to ensure that popular games from Activision Blizzard, now under Microsoft’s umbrella, remain accessible to a broader audience. This move aimed to maintain competition and prevent exclusivity that could limit choices for gamers.

Navigating the Landscape

This acquisition, while transformative for the gaming industry, faced significant antitrust scrutiny from regulatory bodies. The time-intensive approval process underscores the importance of ensuring fair competition and protecting consumer choices. As we navigate this changing landscape, the concessions made by Microsoft demonstrate a commitment to addressing antitrust concerns and maintaining a vibrant, competitive gaming ecosystem. As industry professionals, we will continue to monitor the implementation of these concessions to safeguard the interests of gamers and the broader gaming community.

For more information, please contact KJK Esports, Media & Entertainment attorneys Paige Rabatin (PMR@kjk.com) or Scott Norcross (SAN@kjk.com).