Sunday, May 22

Microsoft in the spotlight, including those of the competition authorities

With the announcement of the acquisition of Activision Blizzard studios for nearly 69 billion dollars, the veteran of the internet giants proves that he has not said his last word – at the risk of attracting the attention of regulators.

Google, Apple, Facebook, Amazon… And Microsoft. The name of the IT group from Seattle often comes after the others, when it is not simply forgotten in debates on technologies, from the moderation of content on platforms to questions of competition law.

But the world’s number 2 cloud (remote computing) – also maker of Xbox consoles, Windows supplier, owner of the Minecraft game and the professional network LinkedIn – may have been underestimated.

“Microsoft is not under the same level of pressure from regulators as the GAFA. In the end, Satya Nadella (the boss of Microsoft, editor’s note) saw it as an opportunity to make a major bet while the others are under fire spotlight and can’t covet that kind of cake,” said Dan Ives of Wedbush Securities.

Nevertheless, “there are going to be obstacles both in Washington and in Brussels to get an operation of this size accepted”, he added.

Because the acquisition of the publisher of video games as popular as “Call of Duty” and “Candy Crush” would be the largest merger-acquisition operation to ever take place in tech.

– Menacing veteran? –

And it comes as the Democratic government does not hide its desire to regulate “Big Tech”. US President Joe Biden has named several figures known for their critical views of the power accumulated by big digital companies.

Alphabet (Google) and Meta (Facebook), in particular, are the subject of investigations and lawsuits for abuse of a dominant position.

The American competition authority (FTC) and elected officials, for example, accuse Meta of having bought WhatsApp and Instagram to establish its domination of social networks and prevent the appearance of any serious competition.

“This transaction could raise competition concerns if Microsoft decides to restrict new content on its platform and not allow its games to be released on the consoles of its close competitors, such as Sony’s PlayStation,” said noted Michael Hewson of CMC Markets UK.

The “Call of Duty” franchise, for example, is available on both Microsoft’s Xbox, PlayStation and Nintendo’s Switch.

Microsoft could choose to behave like some media companies that took over their exclusive movies or series when they launched their own streaming platform.

“While some have argued that this would go against its own interests, and limit its revenue streams, it’s not impossible given how Microsoft has behaved in the past, with bundles tying devices and software together.” , said Michael Hewson.

– Standing up to Asia –

But unlike the numbers 1 and 2 in online advertising (Google and Facebook) or the leader in online commerce (Amazon), even with Activision Blizzard, Microsoft Gaming would be “only” the third largest player in video games, behind Chinese Tencent and Japanese Sony, in terms of revenue.

And the American has fallen behind in mobile games.

“It is difficult to speak of monopolistic behavior” on the part of Microsoft, said analyst Carolina Milanesi.

“Personally, I don’t think the FTC is going to look at it as closely as Amazon and MGM because it’s not about media control,” she continued, referring to Amazon’s acquisition of the legendary studio. Hollywood company MGM to bolster its video streaming service.

The American authorities could also show themselves sensitive to the desire of the United States to make the weight in front of the Asian colossi, in an economic sector as flourishing and promising as that of video games.

Especially since the year 2021 was marked by a record number of takeovers, in particular from Tencent. And it’s not over, according to experts.

“We are entering a new wave of acquisitions in the sector,” said Laurent Michaud, analyst specializing in the video game industry.

“Electronics Arts is a pretty interesting target for a GAFA. If Sony were to set its sights on a company, it could be interested in Bandai Namco, Capcom, Square Enix, Konami or Nexen. And Tencent has already taken a stake in Ubisoft”.

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