Microsoft has managed to fly under the regulatory radar as big tech competitors like Google, Amazon and Meta take heat in Washington, D.C. and Brussels — but the company’s plan to acquire scandal-ridden game developer Activision-Blizzard for $68.7 billion could change everything.
If the deal closes, it would give the maker of the Xbox console control of some of the world’s most popular video game franchises, including Call of Duty, World of Warcraft and Candy Crush. That level of concentration across both hardware and software is bound to attract attention from antitrust authorities, according to tech and D.C. insiders.
“This is going to be a soap opera,” Wedbush Securities managing director Dan Ives told The Post. “There’s going to be a lot of scrutiny.”
With a market capitalization of $2.3 trillion, Microsoft is the world’s second most valuable company after Apple, with business lines in everything from cloud computing to social networking. Yet even as competition authorities in the US and Europe have trained their sights on Apple, Google, Amazon and Meta in recent years, Microsoft has largely avoided any trouble.
That environment has put Microsoft in a unique position among tech giants: It’s big enough to pony up $68.7 billion in cash, but low-key enough to have a chance of getting the deal past regulators.
“Microsoft knows there’s only one company that can do a deal like this,” Ives said, giving the deal a 75% to 80% chance of going through.
That uncertainty appeared to be reflected in Activision-Blizzard’s stock price, which stood was hovering around $82 on Tuesday afternoon — well short of the $95 per share Microsoft wants to pay for the company.
The FTC and DOJ declined to comment on Tuesday during a press conference on Tuesday when asked about any potential investigations or lawsuits around the Microsoft-Activision deal. Insiders say either agency could potentially try to block the deal.
In another sign of potential trouble, the deal includes a $3 billion “break-up fee” that Microsoft will pay Activision-Blizzard if the deal fails to go through — a far higher fee than the $1 billion that would typically be included in a deal of this size, according to Ives.
“That’s Activision hedging their bets,” he said.
Matt Stoller, an antitrust expert and activist and former staffer for Sen. Bernie Sanders, also said the high break-up fee means Microsoft and Activision-Blizzard are bracing for trouble.
Stoller compared the deal to Disney’s acquisitions of Pixar, Marvel, Lucasfilm and large parts of 21st Century Fox, which he argues have given the company a monopoly in the entertainment industry.
“Microsoft is trying to do to the gaming industry what Disney did to Hollywood,” Stoller told The Post. “It should be blocked.”
A potential antitrust case over the Activision deal would not be the first time Microsoft has been accused of building a monopoly.
In the late 1990s, the company was sued by the Justice Department over its practice of bundling the Windows Explorer browser with the Windows operating system for free. Microsoft settled the case in 2002 and agreed to make it easier for competitors to run their software on Windows devices.