Microsoft’s Activision Blizzard acquisition is possibly facing its third block in just as many months after New Zealand voiced concerns about the deal on June 20. The $69 billion transaction has been on the ropes since April, when British regulator Competition and Markets Authority (CMA)blocked Microsoft’s Activision Blizzard acquisitionon antitrust grounds.
A few weeks later, the stateside Federal Trade Commission filed for an injunction meant to stop the tech giant from completing the deal in the immediate future. In response to that request, a San Francisco federal courttemporarily prevented Microsoft from buying Activision Blizzarduntil it rules on the filing in late June.
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New Zealand’s Commerce Commission could possibly add to this growing list of legal and regulatory obstacles to the transaction, having just issued a preliminary report of its own probe into the deal, which includes numerous concerns about the acquisition. The regulator revealed that its ongoing investigation is currently focused on determining whetherMicrosoft’s act of buying Activision Blizzard would have a material impact on the competition in the cloud gaming space due to its “vertical effects.”
For clarity, this mention of verticality refers to supply chain consolidations; in the context of cloud gaming, the deal constitutes a vertical merger because Microsoft operates the Xbox Cloud Gaming service which could benefit from Activision Blizzard’s games content. So, what the New Zealand Commerce Commission is actually trying to determine iswhether the Activision Blizzard acquisition would give Xbox too much powerin the nascent cloud gaming space.
The CMA outlined a similar argument as the basis for its decision to block the blockbuster buyout attempt back in April. And whileMicrosoft promptly appealed the UK rejection of its Activision Blizzard deal, that hurdle had a palpable impact on its still-pending regulatory approvals; both the FTC’s recent injunction request and this preliminary report from the New Zealand Commerce Commission mentioned the CMA’s opposition to deal as one of the reasons why the agencies are reluctant to greenlight the $69 billion deal.
Despite these challenges, the fate of the transaction is far from set in stone, not least because the acquisition proposal already received nods from dozens of countries all across the world. Its latest approvals arrived from the European Union, China, and South Korea, all of which cleared Microsoft’s Activision Blizzard deal this spring. The New Zealand Commerce Commission currently has until July 17 to state whether it intends to join that list of approving countries, assuming it doesn’t postpone that deadline beforehand.
