The case of Microsoft’s takeover of Activision Blizzard is currently still in the hands of competition regulators in many countries. While the European Commission will today announce an in-depth investigation, we still have to be patient before we see the first concrete results of these investigations. But sources close to Activision evoke a new rather pessimistic scenario.
Investor and analyst skepticism is growing in connection with Microsoft’s takeover
Insiders and analysts close to Activision spoke to reporters at the New York Post about the progress of Microsoft’s $69 billion acquisition of Activision Blizzard. According to them, the fact that in-depth investigations are proliferating and that recent progress is not going in Microsoft’s direction would be an important vector for investor skepticism.
Analysts say Microsoft wanted to take advantage of its good relationship with regulators to easily push through the Activision Blizzard takeover without thinking that so many in-depth investigations would be conducted. The pressure is increasing for Microsoft between Sony’s firm resistance and the regulatory authorities’ doubts.
Despite the fact that Microsoft has claimed on several occasions to keep the Call of Duty license on all platforms, the regulatory authorities still doubt it, and it must be said that the behavior of the Redmond company does not help the situation. Ahead of the EU’s in-depth investigation launched today, Microsoft has refused to offer EU regulators legal remedies, Reuters reported. The group had the option of offering the EU so-called behavioral solutions, such as a formal promise to keep the Call of Duty license on PlayStation. Microsoft did not want to do it, and despite the fact that the American company always has the option to do it later, this behavior is still questionable for the investigators.
Activision insiders urge Microsoft to bow out
Faced with this, Activision analysts are openly asking Microsoft to take a more accommodating stance towards regulators. In addition, the group’s shareholders will be paid regardless of whether Microsoft makes concessions or not. Here’s what a hedge fund analyst who follows the case closely says:
“If you’re Activision, you want Microsoft to give everything away for free forever. But that would obviously destroy the economics of the deal.”
Dan Ives, managing director of Wedbush Securities, added this
“Microsoft’s decision to buy Activision is about exclusivity. If giving up exclusivity is one of the necessary concessions, Microsoft will have to think long and hard to figure out if it’s still the right deal. Microsoft is not buying this asset, so other companies can use Activision’s games to the same extent. It all comes down to what concessions are.”
For Clay Griffin, research analyst at MoffettNathanson, the result is the same:
“Microsoft cannot be forced to accept draconian terms”.
What is clear from these testimonies is that the possibility of making Activision games exclusive to Xbox one day remains a big attraction of this acquisition for Microsoft, despite Phil Spencer’s statements. If Microsoft were to sign a legal agreement ensuring that no Activision games would ever be exclusive to Xbox consoles, the acquisition could lose Microsoft’s interest and could constitute a breach of the agreement, according to the same sources.
Now Microsoft is legally bound to do everything possible to make the takeover complete. If not, Activision could sue the Xbox maker if it believes the Satya Nadella-led company deliberately thwarted the takeover. Spokespersons for both companies give the buck and remain very confident. Here’s what Activision’s site says:
“We greatly value our close collaboration with Microsoft. We are confident in the agreement and its development, and we know that Microsoft is working hard to achieve this. Any suggestion to the contrary is false”.
A Microsoft spokesperson told the New York Post:
“From the moment this acquisition was announced, we have worked diligently to demonstrate that we are serious and are taking the necessary steps to achieve approval – including making proactive commitments about how we will manage our business with players and developers in center. The process has proceeded as planned, and we still expect the agreement to be concluded on time. »
Statements that are not very engaging for the rest of the case, but are nevertheless relevant and important to get a more global reading of this takeover, which has caused and will continue to cause a lot of ink to flow in the coming months. Activision and Microsoft recently reiterated their confidence in the feasibility of the deal, which is expected in June 2023.