The Future of the Gaming Industry Amidst the Microsoft $68.7 Billion Dollar Acquisition Deal for Activision Blizzard

When we all heard that Microsoft was acquiring Activision Blizzard, we were all shocked, the prolific gamers were anyway. The first thought that came to mind was, would the renowned Call of Duty franchise still be available on the Sony PlayStation console, Nintendo, and other gaming streaming sites that are not owned by Microsoft? 

Your answer is as good as mine, but probably not. There were also concerns among relevant stakeholders from the gaming industry on whether other famous Activision Blizzard games such as World of Warcraft, Call of Duty, Overwatch, Candy Crush, Warcraft, and Diablo, just to mention but a few would be owned by Microsoft. Well, to set the record straight, if the Microsoft-Activision Blizzard deal succeeds, then, all the games that are owned by Activision Blizzard will be owned by Microsoft.

Image by Activision

The first question I pose in this piece is if the Call of Duty franchise will still be made available to rival consoles and gaming platforms? Microsoft’s CEO Bobby Kotick took the stand and pledged to keep the blockbuster Call of Duty game available to Sony PlayStation. Further, Microsoft has already signed a ten-year deal with Nintendo that will allow the Call of Duty Franchise to appear on their console. Microsoft also made a pledge that the disputed game will be allowed in Nvidia’s cloud gaming service and other platforms for at least ten years.

The most interesting thing about the pledges of Microsoft to gamers and stakeholders in the gaming industry is that they came up in trial. The Federal Trade Commission sued Microsoft and sought to bar Microsoft from purchasing Activision Blizzard because it would limit competition in the gaming industry thus causing a monopoly of commercial power. 

The Federal Trade Commission (FTC) mandate in the United States is to prevent unfair methods of competition, unfair or deceptive acts, or practices affecting commerce. In light of this, the FTC Act authorizes the FTC to seek remedies for consumers including injunctions and restitution or any other relevant remedy.

However, in this suit, the Honorable Judge Jacqueline Scott Corley of the US District Court in the Northern District of California was not convinced that Microsoft acquiring Activision Blizzard would lead to a monopoly in the gaming industry. She, therefore, dismissed the FTC from barring Microsoft from purchasing Activision Blizzard. 

However, a similar suit in the UK is ongoing where the Competition & Markets Authority (CMA) has blocked Microsoft from acquiring Activision Blizzard on the same grounds. One of the major functions of the Competition & Markets Authority is that they investigate mergers that have the potential to lead to a substantial lessening of competition and can impose remedies to address their concerns. The Competition & Markets Authority argues that the deal would alter the future of the cloud gaming market that is quickly growing which will lead to a reduction in innovation and less choice for UK gamers in the long run.

Image by DCStudio on Freepik 

It is quite interesting to note that the distribution rights of the most famous games in Activision Blizzard, Call of Duty being at the top of the list, only came up in trial as a means to show “compromise” and sort of good faith by Microsoft. In as much as this is my opinion, I wonder what will happen in the future even if Microsoft keeps its word on allowing the Call of Duty Franchise to be on other gaming platforms and rival consoles- PlayStation and Nintendo Switch. What will happen after ten years? Will Call of Duty cease to be distributed on rival platforms and consoles at that time? I think that this is very probable because the ownership of the Call of Duty Franchise and other games by Activision Blizzard is not and will not be contested and therefore, Microsoft will have sole ownership of these games and will, thus, have complete Intellectual Property rights over their distribution.                           

As we await the appeal by Microsoft to reverse the Competition & Markets Authority decision, I can’t help but resonate with the CMA’s analysis regarding the problem with the deal. CMA stated that Microsoft accounts for an estimated 60-70% of global cloud gaming services, own Xbox, and also has the leading PC gaming operating system (Windows) and a steady global cloud gaming infrastructure that includes Azure and Xbox Cloud Gaming.

All in all, humans will never cease to be innovative and I hope that in the future all the players in the gaming industry will keep the gamers first in their decisions and business deals.

Johnmark Mackenzie Kiama is a student of law at The University of Nairobi, Kenya. He is a human rights enthusiast. His other areas of interest include criminal law, health law, family and succession law, environmental law, and ADR. He seeks to apply law in other unconventional areas such as in the gaming industry and in other emerging issues in today’s world, especially in the field of tech and the music industry. He can be reached at johnmackenzie@students.uonbi.ac.ke.