Activision Blizzard joins Xbox after Microsoft completes seismic acquisition

Microsoft has completed its $68.7 billion acquisition of Activision Blizzard, meaning the Call of Duty and World of Warcraft publisher has officially been welcomed into the Xbox Game Studios family.

It's a seismic moment for both companies that unites one of the most influential hardware platforms in Xbox with one of the most prolific publishers in the video game industry.

Activision Blizzard owns major franchises including Call of Duty, Overwatch, Diablo, Warcraft, Starcraft, World of Warcraft, Hearthstone, and Guitar Hero. It's also the home of notable development studios including Infinity Ward, Raven Software, Sledgehammer Games, Toys for Bob, and Treyarch. 

Those acquisitions will significantly bolster Microsoft's first-party production capabilities, allowing the company to bring more titles to Xbox Game Pass while taking the fight to PlayStation maker Sony on the software front.

Notably, the merger will immediately bolster Microsoft's smartphone business by granting it ownership of mobile powerhouse King, the developer-publisher behind franchises like Candy Crush Saga, Farm Heroes Saga, and Bubble Witch Saga.

After finally completing the deal, Xbox boss Phil Spencer said the two companies will work together as "one team" to bring the "joy and community of gaming to more people."

"We’ll do this in a culture that strives to empower everyone to do their best work, where all people are welcome, and is centered on our ongoing commitment of Gaming for Everyone. We are intentional about inclusion in everything we do at Xbox—from our team to the products we make and the stories we tell, to the way our players interact and engage as a wider gaming community," added Spencer in a post on Xbox Wire.

"Together, we’ll create new worlds and stories, bring your favorite games to more places so more players can join in, and we’ll engage with and delight players in new, innovative ways in the places they love to play including mobile, cloud streaming and more."

Microsoft defeats regulators to seal Activision Blizzard deal

The deal has been completed almost two years after it was announced, with Microsoft seeing off multiple regulatory challenges from the Federal Trade Commission (FTC) and Competition Markets Authority (CMA) along the way.

Those regulators, which operate in the US and UK respectively, said the deal would harm competition in the game industry by allowing Microsoft to make franchises like Call of Duty exclusive to Xbox platforms. The CMA also believed the deal would enable Microsoft to quickly dominate the nascent cloud gaming market.

So, what happened to those challengers? The FTC took Microsoft to court in the United States in a bid to block the deal but ultimately failed to convince a judge the merger would substantially lessen competition.

Microsoft countered those claims by signing a series of partnerships that would keep Call of Duty on rival hardware and cloud platforms owned by Nintendo, Sony, Nvidia and more for the next decade. Those public commitments undermined the FTC's case, with the judge overseeing proceedings suggesting "the record evidence points to more consumer access to Call of Duty and other Activision content."

The CMA, meanwhile, blocked Microsoft's original merger proposal over fears it would "alter the future of the fast-growing cloud gaming market." Despite that setback and a rather high-profile war of words between those parties involved, Microsoft sought to remedy the situation by agreeing to transfer Activision Blizzard's cloud gaming rights to French publisher Ubisoft for the next 15 years.

After making that commitment, Microsoft submitted a revamped proposal to the CMA. That new-look deal was approved by the UK regulator, which described it as a "game changer that will promote competition."

Can Microsoft rehabilitate Activision Blizzard?

Microsoft has purchased Activision Blizzard at a time when the company's reputation is arguably at an all time low. In recent years, multiple allegations of harassment, inequity, and misconduct have painted a picture of a company with endemic cultural issues.

Back in 2021, the state of California sued Activision Blizzard over reports of harmful, sexist behavior within the workplace that it claimed showed the publisher had nurtured a "frat boy" culture. The Call of Duty publisher was accused of regularly denying promotions to women and failing to address sexist comments.

At the time, Activision Blizzard said it had already taken action to address those issues and claimed the lawsuit contained "distorted, and in many cases false descriptions of Blizzard's past."

Shortly after those allegations surfaced, Activision Blizzard CEO Bobby Kotick was accused of mistreating women both inside and outside the workplace. In a report published by The Wall Street Journal in November 2021, Kotick was accused of enabling abusers at Activision Blizzard by ignoring serious allegations of harassment. The publication also stated that Kotick had been personally accused of mistreating "several women," including an incident where he allegedly sent one of his assistants a voice mail threatening to have her killed.

In response to that report, Kotick shared a video message with employees to emphasize his desire to "create the most welcoming and inclusive workforce." He also suggested "anyone who doubts my conviction to be the most welcoming, inclusive workplace doesn’t really appreciate how important this is to me." Notably, however, he didn't address any specific allegations.

Those incidents are just the tip of the iceberg. More recently, Activision Blizzard was accused of union-busting in a failed attempt to prevent QA workers at studios like Raven Software and Blizzard Albany from unionizing. The company was also lambasted by staff for mandating a return-to-office policy after the COVID-19 pandemic, and was accused by the Communication Workers of America (CWA) of firing some employees who spoke out against the move.

Those allegations paint a picture of a company in dire need of a cultural reset and that begs the question: is Microsoft up to the task? Prior to announcing its acquisition, Xbox boss Phil Spencer said the company was "evaluating" its relationship with Activision Blizzard after Kotick and several other leadership figures were accused of enabling a toxic workplace.

Yet, despite those comments, Microsoft announced its colossal merger just a few months later.

Still, there are some signs of positive change. Last year, Microsoft signed a labor neutrality agreement with the CWA that will allow covered employees at Activision Blizzard to "freely and fairly make a choice about union representation" after the deal is completed. "Microsoft’s binding commitments will give employees a seat at the table and ensure that the acquisition of Activision Blizzard benefits the company's workers and the broader video game labor market, said the CWA at the time.

From here on out we're in uncharted territory. Microsoft has made plenty of commitments to get this deal over the line, and now it's time to see how those partnerships and pledges will impact the status quo. 

Only time will tell what the move will mean for workers at Activision Blizzard, competitors like Sony and Nintendo, and the regulation of other mergers and acquisitions that could materialize in response. But, whatever happens, there's no doubting the video game industry has just witnessed a tectonic power play that could reshape the landscape as we know it.