Microsoft-Activision Deal: What is in it for Web3 if the Deal Fails

Notable web3 game developers and venture capitalists were highly concerned about Microsoft’s long-awaited deal to acquire Activision Blizzard for a whopping $69 million.

The rumors of the predicted acquisition were initially fueled in January 2022. Activision The Microsoft-Activision deal refers to Microsoft’s recent announcement that it plans to acquire Activision Blizzard, one of the largest video game publishers in the world. Activision Blizzard is known for its popular games such as Call of Duty, World of Warcraft, and Candy Crush.

Blizzard’s stock skyrocketed 25% when Microsoft said at the time that the company had agreed to buy the game creator in a large all-cash deal.

The potential failure of the Microsoft-Activision deal could create opportunities for Web3, a decentralized system that allows for new ways of interacting, sharing, and exchanging value online. It is because web3 provides a new way for game developers to create and distribute games without the need for centralized platforms like Microsoft. This could lead to more competition in the gaming industry, which could result in more innovative and diverse games.

Over time, both companies have faced some issues as a result of the failure of this deal. A number of traditional gaming companies and crypto-native outfits have raised concerns about the acquisition, and regulators in the US and overseas have repeatedly attempted to avoid this deal, usually on the basis of anti-trust grounds.

Why UK’s CMA Blocked the Deal

After more than a year of preparation, the deal was finally thought to drive positive outcomes when the UK’s Competition and Markets Authority (CMA) promptly stepped in late last week to halt it. UK’s CMA had fears that this deal will alter the scope of the fast-paced cloud gaming industry. Activision and Microsoft officials have stated that they remain dedicated to making this deal a success. Smaller Web3 game makers are heaving a huge sigh of relief.

The CMA claimed in a news statement that the agreement in its current form could lead to “reduced innovation and less choice for UK gamers over the years to come.”

In an interview on Friday, Paul Hsu, the co-founder, and CEO of the blockchain-focused venture capital firm Decasonic, said that the CMA’s action is a positive move for the Web3 gaming industry.

According to Hsu, it is true, for indie game developers who use blockchains to build their games and related NFT applications, as well as for their backers and incubators. It is also for players who want a little more variety than long-running blockbuster franchises like Call of Duty.

Hsu said: When I saw this, it was like, ‘This is so big and impactful for Web3 gaming,”. He further added: “It certainly impacts so many [in the sector]. The markets reacted correctly, Microsoft was down, and Sony was up. Clearly, this was landscape shifting.”

Blockchain developers may have to compromise in terms of resources, but they are consistent with their work and are revolving to bring in new titles and iterations of existing games.

FTC also Took Measures to Halt this Deal

Activision Blizzard understands the fact that Microsoft has significant resources at its disposal to acquire crypto-native gaming startups that are even more compelling. The Federal Trade Commission (FTC) in the US said in December 2022 that it would work to thwart the agreement. The FTC had concerns that linking Activision Blizzard’s lineup of high-profile video games to Xbox would give Microsoft an unfair advantage.

In the meantime, the number of Web3 executives leaving the transaction has increased.

Daniel Alegra, the President, and Chief Operating Officer of Activision Blizzard at the same time, decided to part ways earlier this year as he was offered the role of next Yuga Lab’s Chief Executive.

Microsoft-Activision Deal

The acquisition is expected to be one of the biggest in the history of the gaming industry and would make Microsoft one of the largest players in the video game market. Microsoft has already stated that the acquisition will help it expand its presence in the gaming industry and bolster its Xbox Game Pass subscription service.

However, the deal has faced some backlash from gamers and industry experts who are concerned about the potential impact on competition and the future of Activision’s popular franchises. Additionally, some employees of Activision have criticized the deal due to concerns about layoffs and company culture. As of now, the deal is still pending regulatory approval and it remains to be seen whether it will ultimately go through or remain unfolded.

Microsoft owns Xbox, the most popular PC operating system (Windows), a global cloud computing infrastructure (Azure and Xbox Cloud Gaming), and accounts for between 60 and 70 percent of all cloud gaming services globally. The company also has other significant advantages in the cloud gaming space.

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