Microsoft and Activision Blizzard: the latest news on the acquisition

In 2021, the state of California sued Activision Blizzard, alleging that the video game publisher fostered a pervasive culture of harassment going back years. Details in the suit spoke of “cube crawls,” where male employees would get drunk and walk around the workplace subjecting female employees to inappropriate behavior. It alleged that male employees would pawn off responsibilities to their female co-workers, how women of color were passed up for opportunities given to less tenured workers, and how a senior World of Warcraft developer was so infamous for his harassment of women that his office was nicknamed the “Cosby suite.”

But news of the suit was just the opening salvo in what would become a battery of reporting, documenting the kinds of harassment that went on at Activision Blizzard. Current and former employees shared their stories, including how a woman was demoted for allegedly reporting her harasser, how a nursing mother had her breast milk stolen from company refrigerators, and how one employee’s sexual harassment led to their death by suicide.

I am not a merger apologist. I generally don’t think the world’s better off with an ever-smaller number of companies at the helm! But of all the reasons to block Microsoft’s $68.7 billion purchase of Activision Blizzard, I never dreamed that “We need to stop Microsoft from dominating cloud gaming” would be the one.

Yet that’s exactly the door regulators chose to walk through on Wednesday, when the UK’s Competition and Markets Authority ruled that the deal could “alter the future of the fast-growing cloud gaming market, leading to reduced innovation and less choice for UK gamers over the years to come.” They’re denying a deal that was widely expected to be approved, leaving Microsoft and Activision Blizzard hanging their hopes on a European Union decision next month.

In a filing (pdf) submitted to the UK’s Competition and Markets Authority (CMA), Microsoft shared some details about how it thinks it will be able to get Call of Duty games to run on the Nintendo Switch.

Last month, Microsoft signed a binding 10-year agreement to bring Call of Duty games to Nintendo players day and date as on Xbox with “full feature and content parity” if its proposed acquisition of Activision Blizzard goes through. In the CMA filing, Microsoft makes two main points to argue that it’s possible to bring games like Call of Duty: Warzone and “buy-to-play” titles like Modern Warfare II to Switch:

The UK’s Competition and Markets Authority (CMA) already expressed concerns about Microsoft’s plans to acquire Activision Blizzard last year, but it now says the deal could harm UK gamers. The CMA has published provisional findings in its investigation into the Microsoft and Activision deal and found that it “could result in higher prices, fewer choices, or less innovation for UK gamers.” The CMA has offered up possible remedies that include Microsoft being forced to sell off Activision Blizzard’s business associated with Call of Duty.

The CMA makes it clear that it’s mainly concerned about two things: cloud gaming and game exclusivity. “The evidence available to the CMA currently indicates that Microsoft would find it commercially beneficial to make Activision’s games exclusive to its own cloud gaming service (or only available on other services under materially worse conditions),” says the UK regulator.

The Federal Trade Commission will not appeal a recent federal court order allowing Meta to purchase VR startup Within, an agency official told reporters on Monday. 

The FTC sued to stop Meta’s acquisition of Within, the company behind the popular fitness app Supernatural, last July. The agency argued that the purchase would expand Meta’s dominance in the VR market, pointing to the Oculus maker’s previous 2019 merger with the company behind Beat Saber. Meta fought the suit but later agreed to delay closing the deal until January 31st. 

Microsoft is seemingly facing more regulatory opposition to its proposed acquisition of Activision Blizzard. According to Politico, the European Union has issued a formal antitrust warning against Microsoft regarding the $68.7 billion deal.

Politico didn’t share exact details about the contents of the warning, but the publication says that in a “statement of objections,” EU officials “laid out the reasons why the deal could threaten fair competition on the video game market.”

Microsoft has been going out of its way to encourage regulators to approve its proposed $68.7 billion deal for Activision Blizzard, and in its latest move, the company is running an ad in The Washington Post spelling out the tech giant’s acceptance of unions. The ad is co-signed by the Communications Workers of America (CWA), which represents workers in industries like communications and media.

“As we enter a new year, we remain committed to creating the best workplaces we can for people who make a living in the tech sector,” the beginning of the ad reads. “When both labor and management bring their voices to the bargaining table, employees, shareholders and customers alike benefit.”

Microsoft has filed its response to the lawsuit filed by the US Federal Trade Commission to block the company’s acquisition of Activision Blizzard. In the 37-page document, which you can read in full below, Microsoft argues its case for why its $68.7 billion acquisition should go through — it also defends its acquisition of Bethesda owner ZeniMax, while admitting that it’s planning to make three future titles from the company exclusive to Xbox and PC.

Those games aren’t named, though Microsoft has basically announced that The Elder Scrolls VI will only be available on its platforms, and confirmed Starfield will be exclusive.

We knew Microsoft would make Bethesda’s Starfield exclusive to Xbox and PC, and it sure looked like The Elder Scrolls VI would skip PlayStation and Nintendo, too. But now, Microsoft’s lawyers are revealing that they’ve got eyes on at least one more exclusive title — there are three future Xbox exclusives from Bethesda, they revealed today, in a response to the FTC’s lawsuit against the Activision Blizzard deal.

“Xbox anticipates that three future titles — REDACTED — all of which are designed to be played primarily alone or in small groups — will be exclusive to Xbox and PCs,” reads a passage in Microsoft’s response.

The FTC has filed a legal challenge to try and block Microsoft’s plan to buy Activision Blizzard for $68.7 billion, according to a press release from the regulator. The lawsuit was filed today after weeks of back and forth between Microsoft, Sony, and regulators over competition concerns and the future of Call of Duty. The FTC argues that the acquisition would “enable Microsoft to suppress competitors to its Xbox gaming consoles and its rapidly growing subscription content and cloud-gaming business.” You can read the FTC’s redacted complaint here or embedded at the bottom of this article.

The vote from the FTC commissioners today means Microsoft now faces significant hurdles to getting its Activision Blizzard deal complete. Regulators in the UK and EU are also scrutinizing the deal closely, despite Microsoft’s repeated attempts to appease regulators.

Workers at Blizzard’s Albany, New York offices — organized as GWA Albany under the Communications Workers of America (CWA) — have won their union vote, making them the publisher’s second union and the third overall union in the US video game industry. The vote was a majority decision — 14 “yes” votes out of a total possible 18 votes — marking an important step in Blizzard Albany’s unionization process that began in July of this year.

“With this victory, we’re advocating for ourselves and each other because we care deeply about our work and the games we make,” said Amanda Deep, associate test analyst at Blizzard Albany, in a CWA press release celebrating the win. “Our colleagues at Raven inspired us when they announced the formation of the Game Workers Alliance / CWA. We can only hope that our win will continue to grow the labor movement at other video game studios across the country.”

Blizzard will suspend games in China because it can’t reach an agreement with its licensing and publishing partner NetEase, it said in a press release. World of Warcraft, Hearthstone, Overwatch 2, Starcraft, Heroes of the Storm, Diablo III, and Warcraft III: Reforged won’t be available in China after January 23, 2023.

Blizzard will suspend the sale of games and offer guidance to Chinese players “in the coming days,” according to the press release, which did not offer a specific timeline. Development of Diablo Immortal is in a separate agreement and will continue, NetEase said in a statement. Upcoming releases, including the latest World of Warcraft expansion, Dragonflight, and the second season of Overwatch 2, “will proceed later this year,” according to Blizzard.

The European Commission has opened what it calls an “in-depth investigation” into Microsoft’s proposed $68.7 billion acquisition of Activision Blizzard. Regulators in the EU first started looking at Microsoft’s Activision acquisition in September and set a provisional deadline of today to approve it or signal a more in-depth review.

Microsoft now faces a larger probe over its plans to acquire Activision Blizzard, with the European Commission set to take 90 working days up to March 23rd to take a decision. The Commission says it’s opening up an in-depth investigation because it’s “concerned that the proposed acquisition may reduce competition in the markets for the distribution of console” and PC games.

Microsoft isn’t happy with Sony and the UK’s Competition and Markets Authority. The UK regulator signaled an in-depth review of Microsoft’s $68.7 billion deal to acquire Activision Blizzard last month, and the CMA has now published its full 76-page report (PDF) on its findings. The CMA says it has concerns that Microsoft’s Activision Blizzard deal could lessen competition in game consoles, subscriptions, and cloud gaming, but Microsoft thinks the regulator has simply been listening to Sony’s lawyers too much.

Microsoft pleaded for its deal on the day of the Phase 2 decision last month, but now the gloves are well and truly off. Microsoft describes the CMA’s concerns as “misplaced” and says that the regulator “adopts Sony’s complaints without considering the potential harm to consumers” and “incorrectly relies on self-serving statements by Sony which significantly exaggerate the importance of Call of Duty.” Microsoft even accuses the CMA of adopting “Sony’s complaints without the appropriate level of critical review,” suggesting that the regulator is simply just listening too much to what Sony has to say.