Xbox / Activision: Takeover by Microsoft may fail, according to several sources | Xbox One
Microsoft’s takeover of Activision Blizzard is currently in the hands of competition regulators in many countries. Although the European Commission announced an in-depth investigation today, we still have to be patient before we see the first concrete results of these investigations. But sources close to Activision suggest a new, rather pessimistic scenario.
Investor and analyst doubts about Microsoft’s takeover are growing
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 proliferation of in-depth research and the fact that the latest achievements do not go in Microsoft’s direction would be a significant vector of doubt on the part of investors.
Analysts say Microsoft wanted to use its good relationship with regulators to make an easy takeover of Activision Blizzard without thinking it would require much in-depth investigation. Pressure is mounting on Microsoft amid Sony’s staunch opposition and regulatory skepticism.
Despite the fact that Microsoft has repeatedly claimed that it wants 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 firm did not help the situation. Reuters reports that Microsoft has refused to offer legal remedies to EU regulators ahead of an in-depth EU investigation that begins today. The group had the option of offering so-called behavioral remedies to the EU as a formal pledge to keep the Call of Duty license on PlayStation. Microsoft did not want to do this, and although the American firm always has the option to do it later, this behavior remains suspicious for investigators.
Activision insiders urge Microsoft to prosecute
Faced with this, Activision analysts are openly asking Microsoft to take a more accommodating position with regulators. In addition, group shareholders will be paid regardless of whether Microsoft makes any concessions. Here’s what one hedge fund analyst following the case said:
“If you’re Activision, you want Microsoft to give everything away for free forever. But this will obviously destroy the economics of the agreement.”
Dan Ives, managing director of Wedbush Securities, added
“Microsoft’s decision to buy Activision is about exclusivity. If giving up exclusivity is one of the trade-offs required, Microsoft will have to think long and hard about whether it’s still the right deal. Microsoft is not buying this asset so that other companies can use Activision games to the same extent. It all depends on what the concessions are.”
For MoffettNathanson research analyst Clay Griffin, the finding is similar:
“Microsoft cannot be forced to accept strict terms.”
What emerges from these statements is that, despite Phil Spencer’s statements, the possibility of making Activision games Xbox exclusives one day or another remains the main attraction for Microsoft in this acquisition. According to the same sources, if Microsoft had signed a legal agreement ensuring that no Activision game would ever be exclusive to Xbox consoles, a takeover could lose Microsoft’s interest and lead to a breach of the agreement.
Microsoft is now legally bound to do everything possible to complete the takeover. Otherwise, Activision could sue the Xbox maker if it believes the Satya Nadella-led company willfully blocked the purchase. Spokespeople for both companies pass the buck and remain very confident. Here’s what Activision has to say:
“We highly value our close cooperation relationship with Microsoft. We are confident in the agreement and its evolution, and know that Microsoft is working diligently to achieve this. Any suggestion to the contrary is false.”
A Microsoft spokesperson told the New York Post:
“Since the announcement of this acquisition, we have worked urgently to demonstrate that we mean business and are taking the necessary steps to win approval, including proactive engagement with players and developers at the center on how we will manage our business. The process has gone as planned and we are still waiting for the deal to close on schedule .”
Statements that are not very compelling for the rest of the case, but are nevertheless relevant and important to a more global reading of this seizure, have and will continue to generate a lot of ink flow in the coming months. Activision and Microsoft recently reiterated their confidence in the feasibility of the deal, which is expected to be completed by June 2023.