Microsoft buys Activision Blizzard, maker of Candy Crush and Call of Duty, for about $70 billion

Microsoft is paying nearly $70 billion for Activision Blizzard, maker of Candy Crush and Call of Duty, as it seeks an edge in the fiercely competitive businesses of mobile gaming and virtual reality technology. The $68.7 billion all-cash deal will turn Microsoft, the maker of the Xbox gaming system, into one of the world’s largest video game companies. It will also help it compete with tech rivals like Meta, formerly Facebook, in creating immersive virtual worlds for both work and play. If the deal passes scrutiny from US and European regulators in the coming months, it could also be one of the largest tech acquisitions in history. Dell bought data storage company EMC in 2016 for about $60 billion.

Activision has been plagued for months by allegations of misconduct and unequal pay. That was raised on Tuesday by Microsoft CEO Satya Nadella in a conference call with investors. “Our organization’s culture is my #1 priority,” said Nadella, adding that “it is critical for Activision Blizzard to deliver on its” commitments to improve workplace culture.

Activision announced last year that it was under investigation by the Securities and Exchange Commission over workplace discrimination complaints, and in September it settled claims filed by US employment discrimination regulators. The California Civil Rights Bureau sued the Santa Monica company in July, citing a “frat boy” culture that had become “a breeding ground for harassment and discrimination against women.”

Activision’s longtime CEO Bobby Kotick will keep his role. Microsoft said he and his team will continue to focus on driving efforts to further strengthen corporate culture and accelerate business growth.

Also Read  PUBG Mobile Bans 471873 Accounts in Massive Crackdown; Cheats on Facebook, also targeted on YouTube

Wall Street saw the acquisition as a major win for Activision Blizzard Inc. and its shares rose 25% in midday trading on Tuesday, making up for losses from the past six months since California’s discrimination charges. Shares of Microsoft fell about 2%.

Last year, Microsoft spent $7.5 billion to acquire ZeniMax Media, the parent company of video game publisher Bethesda Softworks, which is behind the popular video games The Elder Scrolls, Doom and Fallout. Microsoft’s assets also include the popular game Minecraft after it bought Swedish game studio Mojang in 2014 for $2.5 billion.

The Redmond, Washington-based tech giant said the latest additions will bolster its Xbox Game Pass game subscription service while also accelerating its ambitions for the metaverse, a collection of virtual worlds designed as the next generation of the Internet.

The acquisition also pushes Microsoft past Nintendo as the third-largest video game company by global revenue, behind Playstation maker Sony and Chinese tech giant Tencent, according to Wedbush Securities analyst Daniel Ives.

“Microsoft had to make an aggressive deal given their streaming ambitions and metaverse strategy,” Ives said. “They’re the only game in town that can make a deal of this magnitude with the other techs who are under great tech scrutiny.”

Meta, Google, Amazon and Apple have all attracted increasing attention from antitrust regulators in the US and Europe, but the Activision deal is so big it’s likely to put Microsoft in the regulatory spotlight as well, Ives said. Microsoft is already facing delays in its planned acquisition of $16 billion, a Massachusetts speech recognition company Nuance, over an investigation by UK antitrust regulators.

Also Read  Garena Free Fire top 5 Gold Royale bundles are here; Checklist

Microsoft is able to make such a large cash purchase of Activision because of its success as a cloud computing provider. But after years of focusing on supporting its enterprise customers and products such as the Office suite of email and other work tools, Ives said Microsoft’s failed bid in 2020 to acquire the social media platform TikTok “really hurts the appetite.” has awakened to a major consumer acquisition.”

Pushback against the deal was immediate from consumer advocacy groups.

“The Federal Trade Commission and the United States Department of Justice must not authorize this merger in any way,” said a statement from Public Citizen’s competition policy advocate Alex Harman. “If Microsoft wants to bet on the ‘metaverse’, it must invest in new technology and not gobble up a competitor.”

Started in 1979 by former Atari Inc. employees, Activision has created or bought many of the most popular video games, from Pitfall in the 1980s to Guitar Hero and the World of Warcraft franchise. Kotick has been CEO since 1991.

Microsoft said it expects the deal to close in fiscal 2023, which begins in July. The Activision business unit would then report to Phil Spencer, who has led Microsoft’s Xbox division and will now serve as CEO of Microsoft Gaming.

Kotick survived a slew of executives at Activision last year after a series of controversies over allegations of a toxic work culture. A shareholder lawsuit in August said the company had not disclosed to investors that it was under investigation in California and that it had issues with workplace culture that could lead to legal issues.

Also Read  WWE Superstar Rey Mysterio on Cover of WWE 2K22 Video Game

Activision reached a deal with the U.S. Equal Employment Opportunity Commission in September to settle claims following a nearly three-year investigation. The agency said Activision failed to take effective action after employees complained about sexual harassment, discriminating against pregnant employees and retaliating against employees who spoke out, including firing them.

Microsoft has also been investigating its own practices regarding sexual harassment and gender discrimination, and last week opened an investigation solicited by investors at its annual shareholder meeting in November. The company has pledged to publish a report later this year on how it is handling harassment claims, including past allegations involving senior leaders such as co-founder Bill Gates.

Leave a Comment