Microsoft is risking an antitrust fight over the future of gaming

This article was first featured in Yahoo Finance Tech, a weekly newsletter highlighting our original content on the industry. Get it sent directly to your inbox every Wednesday by 4 p.m. ET. Subscribe

Microsoft could take on FTC over $69 billion Activision Blizzard deal

Yahoo Finance's Dan Howley discusses why Microsoft is fighting to acquire Activision Blizzard and where it could lead the Big Tech company. 

Wednesday, December 7, 2022

Microsoft could face its first antitrust fight in years over 'Call of Duty'

Microsoft fired its opening salvo in what could be a major confrontation with the Federal Trade Commission (FTC) over the tech giant’s $69 billion acquisition of Activision Blizzard. On Monday, Microsoft President Brad Smith penned an op-ed in The Wall Street Journal saying that the deal would benefit gamers and developers by making Microsoft more competitive with rival Sony.

The decision is a perilous one, however, as a fight with the FTC risks opening up Microsoft to the same negative attention and scrutiny Alphabet, Amazon, and Meta are facing as they stare down their own antitrust investigations.

So why take such a risk? Because Activision Blizzard, which owns the wildly popular “Call of Duty” franchise, will instantly turn Microsoft into the third largest gaming company in the world by revenue behind Tencent and Sony. What’s more, it will also give Microsoft the opportunity to jump further ahead of Sony in the still-nascent cloud gaming industry, which Newzoo says will jump from $2.4 billion in revenue in 2022 to $8.1 billion in 2025. On top of that, the deal would also make Microsoft a genuine competitor in the fast-growing mobile gaming industry.

And Microsoft would have a truly massive gaming storefront if it combines its cloud gaming options and the mobile gaming titles it acquires through Activision Blizzard like “Candy Crush.”

“The whole reason they're buying this…is they truly intend to become the Netflix of games,” explained Wedbush managing director of equity research Michael Pachter. “The difference between Microsoft's approach and Netflix’s approach is Netflix did it largely based upon content it licensed from others, and Microsoft is doing it largely based upon content that they own and control.”