Bradley partner Henry Su was quoted in Law360 on Microsoft’s $68.7 billion deal to buy Activision Blizzard. The agreement should receive heavy scrutiny from U.S. antitrust and competition regulators, but the transaction is unlikely to be blocked because it doesn't contain obvious anti-competitive implications.
There's no question that this is the type of deal the FTC and DOJ will investigate extensively, and authorities outside the U.S. may also probe the transaction. That's the case based on sheer size alone, according to Su.
"Anything this big is going to be on somebody's radar," he said. "The general climate we're in is that people are sick of companies getting bigger and bigger and bigger. If you're counsel for the companies, you at the very least have to gear up for the possibility of close scrutiny by U.S. authorities," Su added.
According to Su, one way could be to try to explain that Microsoft is gaining an unfair advantage because it is picking up more than just a video game maker — it is also acquiring a massive base of users that will put competitors at a disadvantage when it comes to the metaverse. And the murky idea of the metaverse, which refers to digital environments in which consumers can do things like play games, communicate and buy goods via virtual versions of themselves, has been top of mind for tech companies ever since Facebook rebranded as Meta in October.
"Since then, there's been an implied race to get into the metaverse among big tech companies," Su said. "I can see the concern that by doing this deal, Microsoft is getting some of the key ingredients of the metaverse, which is really the people, the installed base [of users]. It could be games today, but in the future it's that same community of hundreds of millions of subscribers who are going to be your community for the metaverse."
It appears that Microsoft and Activision have considered the possibility of interference from antitrust authorities. The merger agreement includes a clause stipulating breakup fees for a number of reasons, including if the deal is terminated "due to an injunction arising from antitrust laws."
The complete article, "Why Microsoft's $68.7B Activision Play Will Probably Succeed," was published by Law360 on January 21, 2022.