Microsoft’s Metaverse Bet Faces a Hurdle as UK Watchdog Launches Inquiry on Activision Deal

Microsoft’s massive metaverse bet with the Activision Blizzard acquisition is facing another hurdle after the UK antitrust launched a competition inquiry.
Image source: Microsoft.com

Quick take:

  • Microsoft’s acquisition of Activision is being probed by UK’s antitrust watchdog.
  • The regulator has launched a competition inquiry into the deal.
  • The technology giant acquired Activision Blizzard in a $69 billion deal in January 2022.

The UK antitrust regulator has launched an inquiry into Microsoft’s acquisition of Activision Blizzard. The American technology giant bought the global gaming company in a $69 billion deal in January. 

The UK’s Competition and Markets Authority (CMA) has launched an investigation to determine whether the acquisition could cause “a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.”

The acquisition also comes at the back of several other gaming acquisitions by the company, which now make Microsoft the third-largest gaming company by revenue, behind Tencent and Sony.

The probe also comes after Microsoft President Brad Smith in May said the company had received requests from Brussels, London and Washington to provide more details about the acquisition. Smith described the process at the time as “moving fast”. 

In the US, the Federal Trade Commission (FTC) is also looking into the merger to determine its potential impact on the labour market.

FTC Chair Lina Khan last month responded to questions by lawmakers who wanted to know what measures the agency was taking to assess how the deal affects Activision Blizzard workers. 

Microsoft has signed an agreement to labour neutrality with the Communications Workers of America union, preventing it from any involvement in workers’ decision to unionise.

When Microsoft announced the deal earlier this year, its position was clear, that it was going to be an ace in the company’s metaverse play.

At the time CEO, Satya Nadella said “gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms.”

Activision CEO Bobby Kotick told CNBC later that day that the metaverse race helped prompt the Microsoft deal.

Recently, the 3D virtual world has been projected to reach a $5 trillion valuation by 2030 by McKinsey, while Citi had an earlier estimate of $8-$13 trillion.

Overall, the consensus seems to agree that the metaverse is a massive opportunity and every tech giant seems to be eager to take its position in what is deemed to be the next frontier of the entertainment industry.

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