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Published: June 21, 2023

Written by: Stefan Velikov

  • A New Zealand regulatory body puts another obstacle in Microsoft finishing the deal
  • It expresses concerns the merger could impact the competition in the cloud gaming space
  • It argues Xbox Cloud Gaming could benefit unfairly from Activision Blizzard’s games

Microsoft’s attempt to buy gaming giant Activision Blizzard has been thwarted for the third time these past couple of months as New Zealand’s Commerce Commission is launching an investigation.

Microsoft Is in Front of Another Hurdle

Company mergers, especially at the highest level, have always been complicated matters that can take years to conclude. Microsoft is no stranger to that as the tech giant has acquired many smaller companies over the years, but it seems the purchase of its latest target, the gaming giant Activision Blizzard, has once again hit a hurdle.

Microsoft announced it was buying Activision Blizzard for $69 billion in January last year, making it the biggest such deal in gaming history. Ever since then, the tech corporation has been dealing with the intricacies of conducting the merger, which includes having to dodge various national and international regulatory bodies from blocking the deal. However, this is much easier said than done, as New Zealand’s Commerce Commission could possibly put at least a temporary stop to the transaction.

The regulator has recently issued a preliminary report of its own probe into the deal, which includes numerous concerns about the acquisition. It says that the government body is investigating if Microsoft’s act of buying Activision Blizzard would have a material impact on the competition in the cloud gaming space due to its “vertical effects”.

In particular, New Zealand’s Commerce Commission fears that the merger could give the Xbox Cloud Gaming service, also owned by Microsoft, too much benefit from Activision Blizzard’s games content. In essence, the regulatory body is trying to determine if the Activision Blizzard acquisition would give Xbox too much power in the nascent cloud gaming space, as this could monopolize a large part of the market.

This is not the first time such concerns have been raised, as recently a UK regulator blocked Microsoft’s acquisition of Activision Blizzard over similar concerns. “Microsoft already accounts for an estimated 60-70% of global cloud gaming services and has other important strengths in cloud gaming from owning Xbox, the leading PC operating system (Windows) and a global cloud computing infrastructure (Azure and Xbox Cloud Gaming),” the UK regulator’s official statement reads.

Both sides of the merger failed an appeal to reverse the block, but while that has been worked on, other regulatory bodies have also chimed in on the situation, threatening to pause the conduct of the deal. Just a week ago, the US Federal Trade Commission failed to block Microsoft’s deal on the ground that it is necessary to “prevent interim harm to competition”.

While Microsoft and Activision Blizzard have a high chance of getting rid of these blocks, it’s certainly going to slow down their merger. With the latest block from New Zealand, the corporations now have to deal with three major regulatory bodies blocking their path to sealing the contract.

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