Rajkotupdates.news : Microsoft gaming company to buy Activision Blizzard for Rs 5 lakh crore is the biggest acquisition in gaming history. Microsoft, an American multinational corporation, has dominated the gaming world with its advanced technology. Microsoft gaming consoles like Xbox have already prevailed in the gaming arena.
Activision Blizzard is a video gaming company based in America. In 2008, Activision Blizzard was formed by the merger of Activision and Blizzard Entertainment. It’s now considered one of the major video gaming companies in the world.
Microsoft has confirmed to buy Activision Blizzard for Rs 5 lakh crore, $68.7 billion. However, it’s facing various restrictions after this announcement. The Competition and Markets Authority (CMAs) has restricted both companies from making the acquisition deal.
CMA pointed to the fact that Microsoft owns 60-70 percent of global cloud gaming services and more acquisitions could prove fatal for other gaming corporations. Moreover, they also stated that they would require “prior written consent” from the U.S. regulators to lock the deal.
According to the interim order, they were “preventing pre-emptive action” from the companies. They also stressed that Microsoft’s acquisition of Blizzard would certainly reduce productive innovations and consequently, gamers would have few choices in the cloud gaming business.
Other than the U.S., there are regulators from the U.K. and European Union as well. CMA made its ruling in April, And it is expected that the EU will give the ruling in May 2023.
Presently, Microsoft and Activision Blizzard can’t have any interest in each other like buying subsidiaries and investing in each other’s projects.
If the takeover had been manifested without restriction, Microsoft would lead numerous popular games to launch in the future. Likewise, it would be the house of notable titles like Call of Duty, Candy Crush, Overwatch, and World of Warcraft. All these games have millions of users who play the game, and spend billions on games in purchases and subscriptions.
On the other hand, the spokesperson of the gaming companies criticized the decisions of the CMA and implied that the U.K. is “clearly closed for businesses.” Microsoft officials said that they would appeal the decision and would firmly present the case to the Competition Appeal Tribunal.
Why are governments interfering with Rajkotupdates.news : Microsoft gaming companies to buy Activision Blizzard for Rs 5 lakh crore?
Antitrust authorities have taken a hostile stance over the Microsoft gaming companies to buy Activision Blizzard for Rs 5 lakh crore. EU, U.K., and U.S. governments are worried that if Microsoft becomes the owner of Activision Blizzard, it will become enormously dominant and a potent competitive weapon.
The American government took the deal between the gaming companies. U.S. regulators claim that Microsoft wants to make playing games impossible by making them expensive and hard to play. Additionally, Microsoft could also use Activision as leverage to give its products and services a vast leg up over its rivals and license games on discriminatory games.
Authorities in Britain have impeded the deal outright. Whereas, Canada has also stood forward in opposition to this deal. If the ongoing opposition remains substantial, Microsoft might have to change or drop the deal. Until now, Microsoft is adamant about the deal with no resignation.
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Why does Microsoft’s gaming company want to buy Activision Blizzard?
Microsoft claims that Sony’s playstations have been outselling their Xbox consoles and gaming appliances. Due to this, they have suffered for quite some time. To cope with this crisis, they want to become powerful enough by buying Blizzard.
Not only will it boost Xbox, but it will also add big titles to the Game Pass (Netflix-style subscription). The gaming corporation also shared its plans to bring about numerous games for mobile users, where there are huge revenues to be made.
Why Microsoft’s deal with Activision Blizzard is a threat to Sony?
Sony argues that if this deal gets profitable, it will retain a huge loss due to the blockage of profitable games on PlayStation. To prove its assumptions, the latest release of the Call on Duty series installment (Warfare 2) made over $1 bn in the first week. More than half of its copies were sold through PlayStation. Certainly, it would be a huge loss for Sony and other gaming companies that utilize PlayStation.
Microsoft denied all the accusations. Their representatives claim that there’s no plausible justification for not selling games to millions of game users and they don’t want to hurt anyone through their ongoing deal. Further, they announced a deal to appear the Call of Duty games on Nintendo appliances. The same deal was also presented to Sony as well.
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Role of antitrust authorities in halting Rajkotupdates.news : Microsoft gaming companies to buy Activision Blizzard for Rs 5 lakh crore
The Federal Trade Commission and the U.S. Department of Justice (DOJ) are antitrust enforcers that ensure federal antitrust laws. Their primary role is to protect freedom. For several decades, they’d taken a hands-off approach to vertical mergers and only directed their attention to horizontal mergers.
With CMA’s decision, antitrust authorities sought to weigh the harms and benefits, parsimonious scale and scope yielded through the mergings of various corporations. Consequently, they appear to be taking vertical mergings crucial.
According to the new changes;
- Firms that have major shares in a market can’t acquire firms in adjacent markets.
- Acquiring other companies for expanding services and products through a strategic club against rivals isn’t permitted.
- Firms with considerable market presence, particularly multi-billion dollar corporations shouldn’t acquire other companies. On the contrary, they should grow by expanding their capacity, and by developing modern services and advanced products.
As Microsoft doesn’t conform to these requirements, antitrust authorities are working against it with CMA.
What are your thoughts about Rajkotupdates.news : Microsoft gaming companies to buy Activision Blizzard for Rs 5 lakh crore? And what could be the possible future for gaming after this agreement becomes triumphant?