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Monday, July 15, 2024

Microsoft’s $68.7B Deal for Activision Under U.K. Probe

  • In January, Microsoft agreed to purchase Activision Blizzard in an all-cash deal valued at $68.7 billion.
  • The deal is being investigated by the Competition and Markets Authority.
Activision Blizzard makes games like Call of Duty and was acquired by Microsoft.

Microsoft’s potential acquisition of Activision Blizzard is being investigated by the Competition and Markets Authority — a U.K. antitrust watchdog. 

In January, Microsoft agreed to purchase Activision in an all-cash deal valued at $68.7 billion, making the Washington-based tech giant the world’s third-largest gaming company by revenue. 

  • The CMA is considering whether the acquisition will harm competition.
  • It will also evaluate whether the deal will correlate to high prices or reduced choices.
  • The regulator has a deadline of Sept. 1 to expand its investigation. 

The CMA joins two other antitrust regulators reviewing Microsoft’s deal. The Federal Trade Commission is also evaluating it, joining the Australian Competition & Consumer Commission. 

Microsoft has anticipated the regulatory scrutiny and has vowed to “fully cooperate” with the investigation, according to Microsoft’s corporate vice president and general counsel Lisa Tanzi. 

Mixed Results 

Microsoft posted $49.4 billion in revenue in fiscal Q3, an 18% increase year-over-year. The company’s Xbox content and services revenue grew by 4% during the quarter, helping its More Personal Computing segment generate $14.5 billion in revenue — up 11% year-over-year. 

On the other hand, Activision has taken a step back. 

It reported $1.8 billion in revenue in Q1 2022, compared to $2.3 billion for the same period a year prior. Monthly active users reached 372 million in Q1, down from 435 million in Q1 2021.

Activision attributed the lackluster results to the underwhelming launch of “Call of Duty: Vanguard,” due to competition from other publishers and an average reception from gamers.

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