Microsoft’s Metaverse Play Adds Historic $68.7B Gaming Acquisition

·4 min read

Microsoft just hit the gas pedal on its road to the metaverse.

The Redmond, Wash.-based technology behemoth revealed plans to buy game company Activision Blizzard on Tuesday for $68.7 billion, marking the largest gaming acquisition in history.

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Now Activision games like World of Warcraft, Call of Duty, Tony Hawk’s “Pro Skater,” Candy Crush, Crash Bandicoot and more will join Minecraft and others on the company’s slate. With titles on every device, the company views the addition as “building blocks for the metaverse,” according to the announcement.

The purchase by far trumps its other notable gaming purchases, like Minecraft, which joined the fold after Microsoft bought developer Mojang for $2.5 billion in 2014. It also eclipses the $26 billion paid for professional networking site LinkedIn in 2016.

The sheer dollar figure points to the company’s priority on gaming, specifically, and its role in the metaverse, more broadly. Even Activision’s recent sexual misconduct scandals, which prompted employee protests and walkouts last year, apparently couldn’t derail the deal.

The stakes are too high. Microsoft believes gaming “will play a key role in the development of metaverse platforms,” Satya Nadella, Microsoft chairman and chief executive officer, said in a statement. The tech sector seems to agree.

As a virtual reality version of the internet, the metaverse has captivated both Silicon Valley and Madison Avenue, and gaming and work have emerged as the two main roads that lead there. Microsoft already dominates one side of the equation. Now it’s strengthening the other.

As a Windows PC software maker, it owns the world of work computing, with more than 85 percent market share for desktop computers, while its cloud division ranks as one of the top three cloud providers in the market.

Last year, it also introduced Microsoft Mesh, a mixed reality platform that builds off of its Altspace VR acquisition in 2017 to bring a sense of presence to Teams, via virtual communication and collaboration. The company also makes hologram-oriented HoloLens headsets, mostly for developers and enterprise clients, and Xbox consoles powered by its own gaming-centric platform. All of these efforts could be dots that are waiting to be connected.

The latest deal won’t accomplish that on its own, but the sale price points to the company’s priority on the metaverse. In its race to get there, Microsoft was already seen as a top competitor for Facebook’s Meta. Now expansions like this could crank the rivalry up.

Fashion, too, got gaming’s memo. Its interest in virtual platforms, seen through years of experiments and partnerships, have been deepening lately, as brands explore metaverse strategies. Whether Activision titles flush with Microsoft cash will offer some sort of bridge to this future internet remains to be seen. Even if it does, fashion houses would have to reckon with the developer’s past. But companies often go through cultural, structural and business changes under new ownership, so the next few stages may be crucial.

Of course, it may not matter if regulators don’t approve the acquisition. After all, it took a year for the European Union to approve Google’s $2.1 billion purchase of Fitbit, and when the Wear OS-maker wound up closing the deal shortly after, in January 2021, it did so without approval from the Justice Department.

Big Tech acquisitions seem particularly rife at the moment, though. Officials have fretted over monopoly concerns for years, but pieces are now moving into position for a crackdown. In November, President Joe Biden signed a sweeping executive order aimed at anticompetitive tactics in technology and other sectors, with 72 recommendations for a dozen federal agencies.

Last week, a federal judge just revived an anticompetition lawsuit brought by Federal Trade Commission against Facebook over its purchase of Instagram and WhatsApp. The complaint could have forced the company to shed the apps last summer, but it was rejected for being too vague. Now an amended version has been deemed fit to proceed.

Facebook bought Instagram for $1 billion in 2012 and WhatsApp for $19 billion in 2014, in deals considered large at the time. The Activision acquisition is worth nearly $70 billion. It might have had a high bar to jump in any case. But the current climate could complicate Microsoft’s journey to the metaverse.

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