Microsoft Acquisition of Activision​

By Jake Rickman​

What do you need to know this week?

Microsoft announced yesterday that it is buying out game developer Activision Blizzard for almost $70bn in what is one of the largest acquisitions in the company’s history.

Though Microsoft is famed for its Windows operating system and suite of software, this is not its first foray into gaming: the series of Xbox gaming consoles have long since been at the core of its wider operations. In 2021, Microsoft ventured further into the space, acquiring the gaming studio Bethesda.

Meanwhile, Activision Blizzard is famous for several game franchises, including Call of Duty and Candy Crush.

Why is this important for your interviews?

The gaming industry is a fast-growing market driven by technological advances and consumer trends. To date, Microsoft appears to have lost out to Sony in sales of the newest generation of gaming consoles.

The acquisition of a company famed for its cross-platform franchises could help Microsoft catch up, especially if Activision Blizzard starts producing games exclusive to Xbox and Windows computers, as Bethesda did after Microsoft acquired the studio last year.

Additionally, Microsoft has said that it made the offer in anticipation of Activision Blizzard's potential in the metaverse, which has attracted the interests of dozens of large technology and media companies. Though Activision does not currently operate in the metaverse or non-fungible token spaces, Microsoft clearly thinks this will change in the future.

Finally, keep in mind the timing: it's likely that Microsoft approached Activision Blizzard when it did because of an ongoing lawsuit. The suit was brought by employees in July and has pushed the company's share price down 30%.

How is this topic relevant to law firms?

When undertaking due diligence on Activision Blizzard, Microsoft will need the advice of a law firm with a strong Technology and Media practice to advise on areas like intellectual property rights, licensing, and creative production. M&A due diligence processes look to uncover elements in a company’s operations that may create unnecessary or unwanted liability for the buyer. The threat of ongoing litigation can be one of those things that puts a buyer off an acquisition.

In this case, the lawsuit is public knowledge. Nevertheless, Microsoft's lawyers will want to obtain more information, evaluate the company's options and draft clear terms in the sale and purchase agreement. This will serve to protect Microsoft from risk if Activision Blizzard loses.


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