(Bloomberg) – Microsoft’s $69 billion deal to buy Activision is facing heightened scrutiny from regulators, and some insiders at Blizzard Studios are worried that Microsoft could botch the deal, according to Nypost.
Some industry insiders and analysts said Microsoft, which has had better relations with regulators in recent years than competitors such as Meta and Google, likely didn’t expect this level of scrutiny from authorities. Sources close to the situation say mounting pressure has divided the companies behind the scenes, although Activision and Microsoft have put on a brave face in public, insisting the deal will go through.
The key question is how well, or whether there is a lack of commitment, Microsoft has offered to antitrust regulators and gaming rivals such as PlayStation maker Sony, which is strongly opposed to the deal.
Microsoft gaming CEO Phil Spencer has said publicly that the company plans to continue offering Activision’s popular “Call of Duty” franchise on PlayStation and potentially bring it to other consoles, such as the Nintendo Switch.
Reuters reported last week that Microsoft, however, has declined to provide any legal remedies to EU regulators ahead of a full investigation that is expected to likely start Nov. 8. Microsoft has the option to offer so-called behavioral remedies to the EU, such as a formal commitment to keep “Call of Duty on PlayStation,” but Microsoft has refused to do so. The company could still do so later during a full investigation.
Activision insiders and analysts say Activision, led by Bobby Kotick, would prefer that Microsoft take a more lenient approach to regulators now because the game maker’s shareholders will be rewarded whether Microsoft makes concessions or not.
Some analysts and critics see making Activision’s games available exclusively on Xbox as a big draw for Microsoft with the deal, even though the company has stated it will keep “Call of Duty” on PlayStation. While public assurances are one thing, being legally bound to give up exclusive games could derail the deal, the sources said.
Dan Ives, managing director of Wedbush Securities, became: “Microsoft’s decision to acquire Activision is all about exclusivity. If giving up exclusivity is one of the concessions required, Microsoft will have to carefully consider whether this is still the right deal.”
MoffettNathanson Research analyst Clay Griffin likewise said that “Microsoft cannot be forced to accept onerous terms.”
If the European Commission, the U.K.’s Competition and Markets Authority or the U.S. Federal Trade Commission squash the deal, Microsoft would have to pay Activision a $3 billion breakup fee, a drop in the bucket for the $1.7 trillion tech giant.
In a statement to Nypost, an Activision spokesman said, “We appreciate the close working relationship we have with Microsoft. We are confident in this deal and its progress, and we know Microsoft is working hard to get it done. Any thoughts to the contrary would be misplaced.”
In a statement to Nypost, a Microsoft spokesperson said, “From the moment this acquisition was announced, we have been working urgently to demonstrate that we are serious about taking the steps necessary to gain approval, including making an aggressive commitment to how we will operate our business with gamers and developers at the center. The process has progressed as expected and will still expect the transaction to close on schedule.”
Microsoft is legally obligated to use its “best efforts” to close the deal, and Activision could sue the Xbox maker if they believe Microsoft deliberately botched the acquisition.
