Breaking Down FTC vs Microsoft Over Its Activision Blizzard Deal

let's break down what's happened so far and what's the latest into the FTC drama here? Well, let's think all the way back to january of this year when Microsoft announced that they were going to purchase Activision Blizzard for a record $68.7 billion. This would be the largest acquisition in gaming history and make Microsoft the third largest gaming publisher. Now, they always said that they thought this deal was going to take quite some time. They expected regulatory scrutiny. They actually expected it only to close in june 2023. But now the FTC is suing because they believe that Microsoft will have a competitive advantage and they could decrease competition in the gaming space. The FTC hasn't really enacted its powers to sue over large, major deals. Last time, I can really think of it in the tech world was in 2020 when they, when they tried to sue to break up meta. So this whole idea is really a big, big deal in the gaming world. Especially Microsoft, uh, brad smith. Their Ceo does believe the deal will still go through. He actually believes that if this deal goes through, there will be more competition, it will give them a chance to develop more games, develop better experiences for players, especially cause they're building out gaming community. So it's going to definitely come to a head soon. So Michelle, why is the FTC so concerned about Microsoft buying the Activision places, it just about that monopoly that they're afraid of and not being competition? Or is there more to it. Well, that's exactly what it is. It's the competition, but the competition can show itself in different ways. One it could raise gaming prices overall. We've already seen this throughout the industry because of inflation. But they do believe that if Microsoft does own game, a lot of the games, a lot of the popular franchises like Call of Duty, like Minecraft, it could cause them to be able to dictate prices in the market. The second thing is, if they are making so many of the games, it might decrease the quality of games on the market. And thirdly, they do believe it could also decrease the player expiry. Now, this is from the FTC's arguments, they do believe that Microsoft has had a monopoly in the past when they did have other games and they have shown that they withheld titles from other competitors. Other competitors have also spoken up like Sony, they did argue that Microsoft might increase prices if this deal was allowed to go through. All right, So, we know there's been a lot of interest Michelle in video game companies, given the fact that Netflix now has been investing heavily in in video games, Disney's were always rumored to sort of be wanting to by and snatch up one of these, one of these gaming companies. But what does Microsoft see in Activision Blizzard? That makes them worth 60 68.7 billion. I mean, that's a lot of money. I have to agree. And you know, I actually spoke to Phil Spencer who is the ceo of Microsoft gaming a couple of weeks ago. And the interesting thing is he believes it's all due to its mobile capabilities. Let's remember that. Activision Blizzard also owns King which owns Candy crush and other mobile games. I'll let you take a listen to what he said. The thing that really attracted us to Activision Blizzard King was the capability they have in mobile mobile is the largest platform where people play, we've been doing our own organic work with things like Minecraft to build mobile engagement but they just have an amazing set of mobile properties that can really help us accelerate our business and that's exactly where I think they're gonna go with this, it's going to expand their business in ways, especially with the casual gamer that's something that Microsoft has really been looking at. They've added games even into Microsoft teams, they've added mind sweeper as well as solitaire. They're trying to get that whole gaming cohort right now there's certain studies that show that more adults game than actually teenagers and kids so there is a large population that they can expand into and really grow that revenue. Yeah this christmas people aren't just buying those games for the kids for sure. And the prices continue to go up, especially with inflation not only on the games but the Consuls themselves. So do you think now that the pandemic is over, people may not be buying as many that we're headed for a slowdown in terms of people buying these video games and consoles. Now, that's the billion dollar question. You know entertainment is sure to take a hit when families really want to consider there priorities when things start to cost a little bit more. So that's something that definitely Microsoft gaming and Microsoft in general is concerned about. They did lower prices this holiday season on certain bundles, especially their Xbox s which is their lower end Xbox. But they did they didn't rule out the fact that they're going to probably raise the price of the console due to inflation due to supply chain issues next year. And we're seeing that across game developers as well as other game console manufacturers. So it's definitely going to be a more expensive industry to get into. But they are arguing that entertainment is one of the cheapest ways to keep families together and if you are looking to cut costs then it might be something that's worth investing in. If you ask me, they're still going to spend that money to get those new games as soon as they drop. All right, thank you so much Cheddar news. Senior Reporter Michelle Castelluccio