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Microsoft likely faces FTC antitrust investigation into Activision acquisition

Yahoo Finance tech editor Dan Howley discusses the likelihood of an antitrust challenge to Microsoft's planned acquisition of Activision Blizzard.

Video transcript

- Well, shares of Activision Blizzard are falling this morning after a political report suggesting the FTC is likely to file an antitrust lawsuit to block Microsoft's deal for the group. Let's bring in Yahoo Finance's Dan Howley, who is covering that for us this morning. Dan, a pretty strongly worded statement coming out of Activision Blizzard saying any suggestion that this deal is anticompetitive is simply absurd.

DAN HOWLEY: Yeah, that's right. This is a megadeal, right? This is one of the biggest, if not the biggest acquisition by Microsoft ever-- $69 billion to purchase Activision Blizzard. There's two parts to this deal that are very important for the company.

Number one is "Call of Duty." That game is basically a yearly release and brings in millions and millions of players. In the first 10 days that the current version was released, it pulled in a billion dollars in sales. Again, just 10 days on the market, and it managed to do that.

Then there's the mobile component, where Activision Blizzard is king-- the mobile gaming obviously suffering right now because of the ad market. But it's also incredibly lucrative when the ad market is doing well. So there's two pieces to this that would benefit Microsoft.

They're also looking to boost their Game Pass service, and that's their cloud gaming service. And that's where you're able to play games, say, on an underpowered Chromebook using your TV and perhaps just a streaming device, or even just your TV itself, using Xbox Cloud Gaming. And so that would be potentially huge to get "Call of Duty" on something like that.

Sony-- huge opponent to this deal. They believe that if Microsoft gets control of Activision Blizzard, they'll be frozen out of having "Call of Duty." They'll be frozen out of other games as well. Microsoft already purchased ZeniMax and Bethesda's games, which make titles like the "Elder Scrolls," "Fallout," huge prestige titles that gamers now will no longer be able to get on PlayStation platforms.

So their fear here is that, look, "Call of Duty," essentially, a must-have title, and they believe that if Microsoft moves forward with this deal, it would crush the competition there. And then, also, it would make Sony's ability to play in the cloud gaming space, which they've recently launched into, even more difficult.

Microsoft obviously has all of the capabilities in the cloud. They have their Azure platform. They have data centers around the world. So they can offer that.

Sony is catching up, working with one of the other major cloud providers, either Amazon or Google. They haven't been very clear as to which one. But, you know, if this deal does go through, it could be incredibly problematic for Sony.

Now, you may be wondering, well, what does Nintendo have to say about this? They're one of the largest gaming companies out there. Nothing really. Nintendo is its own kind of weird duck. They have their games that appeal to a wide variety of gamers.

And, you know, they're going to continue to move forward. But "Call of Duty" isn't something that they're quite as interested in. So this is going to continue on. I do think, you know, that it will be potentially a huge problem for Activision Blizzard.

And their statement is, "We are committed to continuing to work cooperatively with regulators around the globe to allow the transaction to proceed but won't hesitate to fight to defend the transaction if required." So they're going tooth and nail here. This is basically, you know, Bobby Kotick's escape plan from Activision Blizzard if the transaction goes forward. If it doesn't, then, you know, his future is very much up in the air.

- Certainly, with a property like "Call of Duty" on the table. A big thank-you there, Dan Howley.