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Microsoft under the spotlight of regulators

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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 two in cloud computing (clouds) – also Xbox console maker, Windows vendor, game owner Minecraft and the professional network LinkedIn – has perhaps been underestimated.

Microsoft is not under the same level of pressure from regulators as GAFA. In the end, Satya Nadella, [le patron de Microsoft], saw it as an opportunity to make a major bet while others are in the spotlight and can’t covet that kind of cake, analysis Dan Ives of Wedbush Securities.

Nevertheless, there will be obstacles both in Washington and in Brussels [siège de la plupart des institutions de l’Union européenne] to accept an operation of this size, he added.

Because the acquisition of the publisher of video games as popular as Call of Duty and candy Crush would be the largest M&A transaction to ever take place in the video game industry.

A takeover at the time of regulation

It also comes at a time when the US government is making no secret of its desire to regulate the web giants. Alphabet (Google) and Meta (Facebook), in particular, are the subject of investigations and lawsuits for abuse of a dominant position.

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The US competition authority (FTC) and elected officials, for example, accuse Meta of having acquired 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 competitors’ consoles, such as Sony’s PlayStation., noted Michael Hewson of CMC Markets UK.

The Call of Duty series, for example, is available on Microsoft’s Xbox as well as Nintendo’s PlayStation and Switch.

Microsoft might choose to behave like some media companies that picked up their exclusive movies or series when they launched their own streaming platform.

While many 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 bundled devices and software. »

A quote from Michael Hewson

But unlike the number ones and twos in online advertising (Google and Facebook) or the e-commerce giant (Amazon), even with Activision-Blizzard, Microsoft Gaming would not be than the third largest player in video games, behind China’s Tencent and Japan’s Sony, in terms of revenue.

And the American has fallen behind in mobile games.

Standing up to the Asian giants

It is difficult to speak of monopolistic behavior [de la part de Microsoft]. »

A quote from Carolina Milanesi, analyst

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 legendary Hollywood studio MGM to strengthen its streaming video service.

The American authorities could also be sensitive to the desire of the United States to compete with 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 specialists.

We are entering a new wave of acquisitions in the sector [vidéoludique]. »

A quote from Laurent Michaud, analyst specializing in the video game industry

Electronics Arts is a fairly interesting target for a GAFA. If Sony were to set its sights on a company, it might be interested in Bandai Namco, Capcom, Square Enix, Konami or Nexen. And Tencent has already taken a share of the capital of Ubisoft, he adds.

The Microsoft-Activision-Blizzard transaction will have to pass the test of the competition authorities before being approved. The takeover is expected to be finalized in 2023.

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