Microsoft’s proposed purchase of Activision Blizzard is the biggest proposed deal in video game history, but some notable outlets are wondering if it’s going to happen at all. A Federal Trade Commission suit against the acquisition has turned into a major hurdle that the company must clear.
Business publication Seeking Alpha recently ran an analysis piece that suggested that Microsoft should walk away from the proposed merger, citing legal challenges and an uncertain economic outlook as key factors. Author JR Research also questioned Microsoft’s plan to compete with Google and Apple on the platform front with a proposed “super app.” The author notes that the next few years in gaming are expected to be slow in terms of growth due to the pandemic’s impact on the industry.
The FTC’s case against the deal is not at all straightforward, and its legal fate remains up in the air. As a Columbia Law School professor told the Wall Street Journal, the FTC has a high burden to clear in order to prove that the deal is “anti-competitive,” especially since Activision Blizzard and Microsoft theoretically represent two different phases of the video game production model. This makes the deal a “vertical merger,” which US courts have typically greenlit.
However, regardless of the deal’s ultimate fate in the courts, the drawn-out legal process triggered by the FTC’s suit has endangered the deal by slowing it down. While it seems unlikely that Microsoft would back down from this blockbuster purchase, at least at this early juncture, there are certainly more obstacles in its way than many expected. Indeed, Microsoft has stated that they have complete confidence in their case.
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