Microsoft Aims to Extend Deal with Activision

Microsoft and Activision Blizzard are negotiating an extension of their US$69 billion deal contract

Microsoft Corp. is in talks to extend its acquisition contract with video game maker Activision Blizzard, which is set to expire on Tuesday, July 18, according to a source familiar with the matter. The extension would allow the parties to overcome the remaining regulatory hurdles to their US$69 billion deal, which would be the largest in the gaming industry.

Microsoft announced its intent to buy Activision Blizzard, the publisher of popular franchises such as Call of Duty, World of Warcraft, and Candy Crush, in January 2022. The deal would boost Microsoft's gaming division, Xbox Game Studios, and give it access to more than 400 million monthly active players across various platforms and genres.

The deal has already received government approvals in 39 countries, including the U.S., where the Federal Trade Commission dropped its antitrust challenge last week. However, the deal still faces opposition from the UK Competition and Markets Authority (CMA), which issued an order in April barring the companies from closing the deal until it completes its investigation.

The CMA said it has concerns that the deal could reduce competition and innovation in the gaming sector and harm consumers by raising prices or lowering quality. The CMA also said it has jurisdiction over the deal because Activision Blizzard has a significant presence in the UK, with over 2,000 employees and several studios.

The CMA said on Monday that it has held "productive" talks with Microsoft and Activision Blizzard about a resolution, but it has not lifted its order yet. The CMA has extended its target date for the probe to August 29. It could impose remedies such as divestitures or behavioral commitments if it finds the deal is anti-competitive.

According to the source, the companies plan to stay in the deal and will continue seeking the final regulatory approvals needed for closing. The merger agreement set July 18 as the date that both companies could terminate the deal, with Microsoft bound to pay Activision Blizzard US$3 billion if the deal is canceled.

The deal has also faced criticism from some gamers and activists who have accused Activision Blizzard of fostering a toxic work culture and failing to address allegations of sexual harassment and discrimination. Several state and federal agencies have sued Activision Blizzard over these issues, and some of its executives have resigned or been fired.

Microsoft has said it is committed to ensuring a safe and inclusive environment for all employees and players and will work with Activision Blizzard to implement changes and improvements. Microsoft has also said it will respect the creative autonomy and independence of Activision Blizzard's studios and franchises.

The deal would be a major milestone for Microsoft's gaming ambitions, as it seeks to compete with rivals such as Sony and Nintendo and expand its cloud gaming service, Xbox Game Pass. The deal would also testify to the growing popularity and profitability of video games, especially during the Covid-19 pandemic.