After one year, eight months, and 26 days, Xbox has finally completed its acquisition of Activision Blizzard, meaning it now owns premium video game franchises including Call of Duty, Overwatch, and Diablo.
Microsoft announced its intention to buy Activision Blizzard on January 18, 2022 but unlike its relatively smooth acquisitions of studios like Starfield and Fallout maker Bethesda, the historic $68.7 billion deal was almost brought to a halt several times.
The deal seemed doomed at times, with the United States' Federal Trade Commission (FTC), European Union, and UK's Competitions and Markets Authority (CMA) all bearing down on Xbox and Activision Blizzard. The pair emerged successful, however, as the deal was finally closed on October 13, 2023.
IGN has outlined every challenge faced by Microsoft and Activision Blizzard below, providing a complete history of the deal and how they finally managed to push it through.
First Concerns Raised by U.S. Senators
The first in a long line of concerns surrounding the Activision Blizzard acquisition arrived on April 1, 2022 as four U.S. senators including Bernie Sanders wrote a letter to the Federal Trade Commission (FTC) challenging consolidation in the tech industry.
Sanders alongside Elizabeth Warren, Cory Booker, and Sheldon Whitehouse, wrote they were "deeply concerned" about the deal's impact on workers. The senators referenced the wave of sexual harassment and other allegations issued against Activision Blizzard, saying the acquisition could "further disenfranchise these workers and prevent their voices from being heard."
The letter continued: "The FTC should assess whether the ways in which these companies have failed to protect the rights and dignity of their workers are driven by monopsony power or amount to anticompetitive harms in our labour market, and if so, if the merger will exacerbate these problems."
Wall Street Questions Viability Despite Shareholder Approval
What could have been a strong step forward for the deal only raised more questions as, on April 28, 2022, 98% of Activision Blizzard shareholders voted to approve the company's acquisition by Microsoft.
The deal was approved at $95 a share, but shareholders grew concerned as this number had been slowly lowering at the time to the low $80 range and as low as $75.60 on April 29. This was interpreted by some as a lack of shareholder confidence around the deal's ability to ultimately pass.
Despite dipping further towards the end of the year, however, and encountering some other ups and downs, share prices began steadily rising again as of May 2023.
UK's Competitions and Markets Authority Launches Investigation
What would become the biggest hurdle for Microsoft and Activision Blizzard to overcome began on July 6, 2022 as the UK government's Competitions and Markets Authority (CMA) announced an investigation into the deal.
Responsible for ensuring fair competition between businesses in the UK, the CMA said it intended to "consider whether the deal could harm competition and lead to worse outcomes for consumers", citing concerns around high prices, lower quality products, and reduced choice.
Microsoft maintained confidence in the face of the investigation, saying it expected and thought it appropriate the deal should be scrutinised by regulators. "We have been clear about how we plan to run our gaming business and why we believe the deal will benefit gamers, developers, and the industry," Microsoft corporate vice president and general counsel Liza Tanzi told IGN at the time.
Call of Duty Becomes the Centre of Debates
As an Activision Blizzard game and the most popular release each year, Call of Duty quickly became the centre of conversations surrounding the deal. While questions were raised from day one, and Microsoft and Sony threw accusations and condemnations towards each other fairly regularly, actual possibilities surrounding exclusivity only emerged later.
On September 1, 2022 as the CMA recommended a second phase investigation into the deal, Microsoft said Xbox Game Pass would receive new Call of Duty games day one, but this wouldn't impact their launch on PlayStation. Talks between the console competitors began behind the scenes too, with Xbox allegedly offering to bring Call of Duty to PlayStation for three years beyond the current contract.
PlayStation CEO Jim Ryan raised an issue with the plan a few days later on September 7, however, calling Microsoft's proposition an "inadequate" solution on "so many levels". Ryan highlighted the impact on gamers, saying he and Sony "want to guarantee PlayStation gamers continue to have the highest quality Call of Duty experience, and Microsoft’s proposal undermines this principle."
CMA Raises More Concerns as Xbox and PlayStation Squabble
An update from the CMA on October 12, 2022 raised several areas in which the competition regulator had concerns over the deal. "There is a realistic prospect of a substantial lessening of competition in gaming consoles, multi-game subscription services, and cloud gaming services," the regulator said.
The increased scrutiny from the CMA triggered a wave of new arguments from both Xbox and PlayStation, as the former tried desperately to see the deal through and the latter sought to block it. This led to many unusual statements over the next couple of months from Microsoft in particular.
Xbox essentially called PlayStation too big to fail, for example. "While Sony may not welcome increased competition, it has the ability to adapt and compete," it said, adding that Xbox has a "number of significant disadvantages" in streaming. Microsoft president and vice chairman Brad Smith also said Xbox's acquisition of Activision Blizzard was fair because PlayStation has significantly more exclusive games.
Looking to put the Call of Duty argument to bed (though it continued for several more months), Xbox boss Phil Spencer said on October 31 the company would continue to release the shooter on PlayStation "as long as there's a PlayStation out there to ship to". This was followed by an offer from Xbox on November 11 to keep Call of Duty on Sony's consoles for ten years alongside similar commitments to Nintendo.
The Federal Trade Commission Enters the Fray
In what appeared at the time to be the biggest hurdle for Microsoft at the time, the United States' Federal Trade Commission sued to block Xbox's acquisition of Activision Blizzard. In a statement, the agency said Xbox would "gain control of top video game franchises" and therefore "harm competition in high-performance gaming consoles and subscriptions services by denying or degrading rivals’ access to its popular content."
The FTC pointed to Microsoft's history of acquisitions and making those games exclusives, like it did with Bethesda and games including Starfield and Redfall. Xbox again remained confident, however, with Microsoft president Brad Smith saying it will "continue to believe that [its] deal to acquire Activision Blizzard will expand competition and create more opportunities for gamers and game developers".
Activision CEO Bobby Kotick chimed in too. "This sounds alarming, so I want to reinforce my confidence that this deal will close," he said in an internal memo delivered to employees.
European Union Issues Antitrust Warning
The European Union became the latest government body to target the deal on February 3, 2023 when it issued a formal antitrust warning to Microsoft. The statement of objections was not made public but the EU had previously raised concerns over the exclusivity of Call of Duty.