In this file photo, the Activision Blizzard Booth is shown on June 13, 2013, during the during the Electronic Entertainment Expo in Los Angeles. (AP Photo/Jae C. Hong, File)
Software maker Microsoft is buying the video game company Activision Blizzard for nearly $69 billion in one of the biggest technology deals in history.
Microsoft announced the agreement Tuesday and said it is expected to be completed in 2023. The deal must be approved by government regulators.
Activision Blizzard produces a series of popular and profitable video games including Call of Duty, World of Warcraft and Candy Crush. Microsoft is the maker of the Xbox gaming system and is expected to add those games, along with others, to its subscription service.
If approved, the deal will turn the software maker into one of the world’s largest video game companies. It is expected to better position Microsoft to take on other major videogame competitors like China’s Tencent and Japan’s Sony.
The deal is also expected to help Microsoft better compete with technology companies developing equipment and systems for a future “metaverse.” Metaverse is a term used to describe a non-physical world in which individuals can interact through different kinds of virtual technology.
Among the companies that have confirmed the development of metaverse technologies are Microsoft, Facebook’s parent Meta, Google and Apple. In announcing the agreement, Microsoft Chief Executive Satya Nadella said gaming is expected to play an important part "in the development of metaverse” systems.
Experts said the deal will turn Microsoft into the third-largest video game company in the world, a position formerly held by Japan’s Nintendo. Only Sony – maker of the PlayStation gaming system – and Chinese technology leader Tencent are bigger.
Microsoft’s Xbox already develops and produces its own games. But the deal with Activision Blizzard will give the company control of many additional games. This is likely to raise questions about whether Microsoft could shut out competitors by restricting Activision games to its own Xbox system and Windows-powered computers.
Nadella, however, promised this would not be the case. He said the deal would actually help people play games “wherever, whenever and however they want.”
Daniel Ives is an industry expert with Wedbush Securities. He told The Associated Press that Microsoft “needed to do an aggressive deal” because the company has plans to greatly expand in streaming and metaverse development.
Ives added that the size of the deal is likely to bring closer attention from regulatory agencies in the United States and Europe.
One group, Public Citizen, criticized the proposed agreement. The group’s Alex Harman called on the Federal Trade Commission and the U.S. Department of Justice to block the deal. “If Microsoft wants to bet on the ‘metaverse,’ it should invest in new technology, not swallow up a competitor,” Harman said.
The deal came after Activision Blizzard faced months of accusations involving sexual misconduct at the company by several top managers. There were also employee accusations of workplace discrimination and unequal pay.
The company has said it is still investigating and dealing with the accusations. On Monday, Activision Blizzard said it had fired or pushed out more than 36 employees for violating company policies and disciplined 40 others since July.
In a conference call with investors, Nadella did not directly speak about the misconduct issues. But he did talk about the importance of company culture. "It's critical for Activision Blizzard to drive forward on its renewed cultural commitments," he said, adding, "the success of this (deal) will depend on it."
Words in This Story
regulator – n. a body with the responsibility to control an activity or process, especially by using rules
subscription – n. an agreement that you make with a company to get a publication or service regularly and that you usually pay for in advance
virtual – adj. used to describe something that can be done or seen using computers or the internet instead of happening in a physical place
streaming – n. the continuous transmission of video files from a server to a viewer
bet – v. to risk money on the result of a game, competition, etc.
misconduct – n. behavior by someone in a position of responsibility that is morally wrong or breaks the rules while doing their job
discipline – n. the control of people’s behavior by using rules and punishments
renew – v. to arrange to continue an official agreement or set of rules