Microsoft opposed to 'carving up' Activision as divesture strategy

Microsoft is opposed to divesting Activision, Blizzard, or King as structural remedies in order to get the merger passed: 'We don't think it's realistic'

Microsoft opposed to 'carving up' Activision as divesture strategy
2 minutes & 4 seconds read time

Microsoft executives push back against the idea of divesting or spinning off operating units of Activision Blizzard King in order to get the merger passed by regulators.

During an opportune press conference in Europe, Microsoft president Brad Smith said that the company is "more than ready" to address regulatory concerns regarding the $68.7 billion Microsoft-Activision merger deal, however Microsoft is apparently against key structural remedies that could drastically interfere with post-merger profitability while also getting the merger approved.

Analyst and games industry expert Joost van Dreunen came up with an interesting answer to FTC, CMA, and European Commission concerns: Microsoft could divest (sell or spin-off) the Blizzard segment as a structural remedy (learn more about structural remedies here) to satisfy regulators. Blizzard is the least-profitable operating segment but also contains billion-dollar franchises like Overwatch, Diablo, and World of Warcraft.

Today during the press conference in Brussels, Microsoft's Brad Smith was asked about a possible split of Activision's three segments (Activision, Blizzard, and King) as part of a divesture strategy to address regulators' concerns.

Smith responded by saying the solution isn't realistic. "We don't think it's realistic that one part of this company can be carved out from the rest," Smith said at the meeting, as transcribed by Games

The Microsoft exec also affirmed that the company has lots of experience with addressing regulatory issues and concerns, particularly with the European Commission, and is prepared to offer concessions.

Microsoft today officially signed a 10-year commitment to bring Call of Duty and other Xbox games to Nintendo platforms if the merger closes, and also signed a deal with NVIDIA to bring all Xbox PC games as well as Activision titles like Call of Duty to NVIDIA's GeForce Now game streaming service.

The deals with Nintendo and NVIDIA are behavioral remedies (these deals are technically referred to as "access remedies," which are a type of behavioral remedy), and not structural remedies. Microsoft may be required to make both types of remedies in order to get the merger passed in the United States, Europe, and the UK.

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Derek joined the TweakTown team in 2015 and has since reviewed and played 1000s of hours of new games. Derek is absorbed with the intersection of technology and gaming, and is always looking forward to new advancements. With over six years in games journalism under his belt, Derek aims to further engage the gaming sector while taking a peek under the tech that powers it. He hopes to one day explore the stars in No Man's Sky with the magic of VR.

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