Game-Changing: Latest Hurdle Threatens Microsoft's Activision Blizzard Takeover

Microsoft's $69 billion acquisition of Activision Blizzard is facing potential obstacles once again, this time with New Zealand expressing concerns about the deal on June 20. The transaction has already encountered setbacks in the form of a block from the British regulator Competition and Markets Authority in April, citing antitrust issues. Subsequently, the Federal Trade Commission in the United States filed for an injunction to halt the deal, resulting in a temporary restraining order from a San Francisco federal court until a ruling is made at the end of June.

New Zealand’s Commerce Commission may contribute to the growing list of legal and regulatory challenges to the transaction. The commission recently released a preliminary report on its own investigation into the deal, expressing various concerns about the acquisition. It stated that its ongoing inquiry is presently focused on determining whether Microsoft's purchase of Activision Blizzard would have a significant impact on competition in the cloud gaming sector due to its "vertical effects."

In the context of cloud gaming, the merger between Microsoft and Activision Blizzard is considered a vertical merger, specifically in terms of supply chain consolidations. This is because Microsoft operates the Xbox Cloud Gaming service, which could greatly benefit from Activision Blizzard's games content. The New Zealand Commerce Commission is currently assessing whether this acquisition would result in Xbox having an excessive amount of power in the emerging cloud gaming sector.

The UK's Competition and Markets Authority (CMA) also made a similar argument when it blocked the buyout attempt in April. Microsoft, however, promptly appealed the decision, but the setback has had a noticeable impact on the ongoing regulatory approvals. The recent injunction request from the Federal Trade Commission (FTC) and the preliminary report from the New Zealand Commerce Commission both mentioned the CMA's opposition to the deal as one of the reasons why the regulatory agencies are hesitant to approve the $69 billion acquisition.

The fate of the transaction is uncertain, as it faces various challenges. However, there have been positive responses to the acquisition proposal from numerous countries worldwide. Microsoft's Activision Blizzard deal has already received approvals from the European Union, China, and South Korea earlier this year. The New Zealand Commerce Commission has a deadline of July 17 to decide whether it will also approve the deal, unless they choose to extend the deadline.