Advancing the third-largest corporate deal of the decade, the General Authority for Competition in Saudi Arabia has approved Microsoft Corp.’s planned $68.7 billion acquisition of embattled gaming studio Activision Blizzard Inc.
For the past year, the Federal Trade Commission in the United States and other regulatory bodies from around the world have deliberated over the surge of high-profile gaming acquisitions. Industry giants such as Microsoft, Sony Group Corp. and Take-Two Interactive Software Inc. have been aggressively acquiring studios in what has been described as the great consolidation of the video games industry.
Among those cases, the Microsoft-Activision Blizzard merger has been especially contentious. If it goes through, the gargantuan $68.7 billion merger will be the most expensive video game acquisition ever.
Some Activision Blizzard employees have welcomed the merger in hopes that Microsoft leadership will clean house at the game publisher, according to Bloomberg.
The company was sued by labor regulators in California last year; they alleged that Activision Blizzard cultivated a “pervasive ‘frat boy’ workplace culture” that resulted in women leaving the company, as well as the suicide of one employee in 2017.
Employees at Activision Blizzard have staged multiple walkouts in response to the lawsuit, over layoffs and following the lifting of vaccine mandates at the company. Some employees have also called for CEO Bobby Kotick to step down.
Sony, one of Microsoft’s chief rivals in the gaming space, has publicly critiqued the merger. In comments submitted to Brazil’s antitrust regulator, Sony argued that the acquisition would eventually lead to Microsoft holding a monopoly over the market because of the massive popularity of Activision Blizzard’s Call of Duty.
Saudi Arabia’s Public Investment Fund, which has been investing heavily in various ventures to diversify the country’s assets beyond oil, has also been buying large stakes in various video game companies.
This push into the game industry is being led by Saudi crown prince Mohammed bin Salman, who chairs the fund. According to a 2018 profile in the New Yorker, the crown prince is a fan of Call of Duty.
When news of the Microsoft and Activision Blizzard acquisition broke, the Public Investment Fund enjoyed a $1.1 billion boost from its previous investment in Activision Blizzard.
Similarly, on Aug. 19, Swedish holding company Embracer Group AB announced its acquisition of eight properties for an estimated $780 million, a power move made possible by a $1 billion injection from the fund via Savvy Gaming Group.
Saudi money remains a contentious subject in the game industry because of the country’s history of violence and abuse toward dissidents, women, minorities, migrant workers and others.
In June 2020, Riot Games announced that its League of Legends European Championship partnered with NEOM, Saudi Arabia’s planned smart city in its Tabuk Province.
The game’s fans lashed out against the company, and broadcast talent for the esport organized a strike in protest. In response, Riot canned the partnership within 16 hours of introducing it.
