In an unprecedented move, the proposed Microsoft / Activision-Blizzard deal was blocked by the Department of Justice (DOJ) and the Federal Trade Commission (FTC) to prevent a monopoly in the gaming industry. The acquisition, which would have cost Microsoft a whopping $68.7 billion, was supposed to strengthen its foothold in the cloud gaming market. However, experts believe that the move could have had detrimental effects on competition, innovation, and diversity. Here’s why:

The bid to dominate the gaming industry

The Microsoft / Activision Deal

Microsoft, in its bid to compete with the likes of Amazon, Google, and Nvidia in the cloud gaming sector, planned to acquire Activision, one of the largest game publishers in the world. Activision’s impressive portfolio of franchises, including Call of Duty, World of Warcraft, Diablo, and Candy Crush, would have added tremendous value to Microsoft’s Xbox Game Pass and Cloud Gaming offerings. The acquisition would have made Microsoft the largest AAA game publisher globally, a move that could have potentially wiped out the competition and consolidated the market.

The Challenges with Monopolistic Game Companies

The Problem of Monopoly

While the deal had the potential to boost Microsoft’s position in the industry, such monopolistic moves are widely frowned upon due to their negative effects on competition and innovation. With a vast share of the market and little competition, companies might become complacent, leading to fewer choices for consumers and fewer opportunities for smaller players. Additionally, consolidation could lead to widespread layoffs and less diversity in the industry.

Baseless Fears or Valid Concerns?

The DOJ Blocks the Deal

The DOJ and FTC’s decision to block the Microsoft / Activision deal was not wholly unexpected. Reports indicate that the government reviewed the deal and concluded that it could lead to an “increased concentration of resources and the potential for enhanced gatekeep power.” In other words, the acquisition would have made it easier for Microsoft to dictate terms and limit the competition, hurting consumers and other companies.

The Importance of Diversity and Progress in Gaming

The Role of Diversity

Aside from the monopoly issue, concerned stakeholders pointed out that the deal could stifle progress and diversity, two key drivers of the gaming industry’s growth. Activision, in particular, has long been criticized for its lack of diversity, both in its games and its workplace culture. Critics argued that a merger with a company like Microsoft, which also faces diversity issues, could make the situation much worse, leading to fewer opportunities for marginalized groups and perpetuating harmful stereotypes.

Summary

In summary, the Microsoft / Activision deal would have created a gaming giant with unprecedented power and control over the market. While it might have given Microsoft the edge it needed in the cloud gaming market, its potential negative effects on innovation, competition, and diversity made its demise the best outcome for all. Now, the industry can continue to grow with multiple voices, more opportunities for smaller players, and a more diverse and inclusive environment. #microsoftactivisiondeal #diversityandprogress #cloudgaming #competitioninnovation #monopolygamemarket #gamingindustrygrowth #BUSINESS