On Tuesday, Microsoft and Activision Blizzard publicly announced that the former would be acquiring the latter in a nearly $70 billion deal. If the deal goes through, pending approval from all the appropriate government agencies, it would be the largest acquisition in the video game industry's history. There are some questions regarding whether the United States of America's government will stop Microsoft's acquisition due to antitrust law, however. One legal expert says that there's nothing to worry about, in that regard.Speaking with IGN, Gamma Law's managing partner David Hoppe weighed in on the possibility of the Activision Blizzard acquisition being held up due to antitrust law. Simply put, Hoppe doesn't believe that there's any reason to worry. He says that courts in the United States have, "historically been unwilling to apply restrictive antitrust principles to vertical transactions." While Hoppe leaves room in his language for the possibility of a change in policy, he clearly expects otherwise.As for what a vertical transaction means, it refers top the joining of two or more companies that provide different functions. In this case, Microsoft is a platform provider and distributor. It provides the Xbox console, as well as the economy that runs on it. Activision, in turn, is a video game publisher and so is further down the food chain, so to speak. An appropriate comparison would be Microsoft's early acquisition of publishers like ZeniMax Media or Double Fine Productions, both of which went through without a hitch.
The comparison to ZeniMax Media and Double Fine is, of course, flawed in scale. Activision Blizzard is one of the largest video game companies in the world. However, Microsoft is definitely larger. Despite Activision Blizzard's size, the acquisition is undeniably a vertical transaction. It's just a very, very large vertical transaction.
Hoppe does acknowledge that there is room to argue that the Activision Blizzard acquisition could be seen as a horizontal acquisition rather than a vertical one. Microsoft and Activision Blizzard both produce games, after all, and could be seen as direct competitors. But Hoppe considers this argument ridiculous, saying that claiming an antitrust case on the basis of "less consumer choice in the shooter games product category" is not a sound argument.
It's always possible that the US Government attempts to prevent the acquisition, nonetheless, which would lead to a long and drawn-out court case. Microsoft is, after all, a very large company, and each respective acquisition is certain to draw deeper scrutiny. Short of Microsoft attempting to acquire Sony or Nintendo, however, an antitrust suit appears unlikely to happen. Microsoft's acquisition of Activision Blizzard is expected to conclude prior to June 30, 2023.
Source: IGN