The Six Five team discusses the FTC’s loss in its appeal in Microsoft-Activision case, and whether the deal will now move forward.
If you are interested in watching the full episode you can check it out here.
Disclaimer: The Six Five Webcast is for information and entertainment purposes only. Over the course of this webcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we ask that you do not treat us as such.
Transcript:
Daniel Newman: The Microsoft Activision deal’s passing.
Patrick Moorhead: No, I think that was a good call. I didn’t lean into it as hard as you did just because it wasn’t as straightforward as a hardware company buying a software company. But no, let’s dive in here. So Microsoft is trying to buy Activision. Activision is one of the largest makers of amazing software, World of Warcraft. Some of my son, Patrick’s, his favorite games are done by this company; attracted big time scrutiny of course by Lina Khan’s FTC. They sued for an injunction to stall the go ahead of this to happen. The FTC said, “Don’t do it.” Microsoft said, “No, we’re moving forward.” FTC sued. Well, the FTC lost in U.S. District Court in San Francisco on July 10th, I think, a mere four days ago.
The FTC, “You thought this was over? We thought this was a done deal because hey, it’s approved in EU, Ukraine, Saudi Arabia, Brazil, Serbia, Chile, Japan, South Africa, South Korea and China. It’s all been approved.” By the way, I didn’t know that Serbia or Ukraine had its own approval. I guess they would. They’re sovereign countries and not part of the EU. I don’t know. I guess not. So FTC appealed. So this is the only dangling Chad to move forward. Listen, Microsoft is making concessions to what is just by fact, not editorial, a dominant Sony in console gaming. So is there really anything left here? I don’t think so. This deal’s going through.
Daniel Newman: Yeah, this one probably doesn’t require as much time as the China one by any means, but it was really interesting, my bet if sometimes these things are really scientific and sometimes it’s more gut. There was definitely reasons, definitely concerns. You saw some of those leaked emails that talked about the guy that basically said, “This is how we can kill Sony.” There’s literally emails that talked about, “This is what we can do to…” Obviously, things like that are going to have to be addressed. But there’s also in the handset mobile, get in the era of mobile gaming, console isn’t everything anymore. There’s so many ISVs and gaming developers and gaming options and gaming platforms.
It’s like, yes, there are some significant platforms where gaming is consumed on the phones, on the consoles, on computers, PCs, desktops. But having said that, there’s also a lot of optionality as to what games and where you get your games and what platforms you want to play. I just thought there was, Pat, just frankly, just too many options; too many options that was going to make it very hard to determine that there was really a massive risk of over rotating to anti-competitive. Plus, Nvidia has one. Nvidia has a gaming platform now, Pat, so they’re the world’s largest company now, aren’t they?
Patrick Moorhead: $1.1 trillion. I wonder when regulators start looking at Nvidia?
Daniel Newman: Oh, geez, I don’t know. They only have 99% of the training market. It’s like 95, right?
Patrick Moorhead: Yeah.
Daniel Newman: Yeah. Anyway, sidebar. Another, let’s talk about that later. Anyway, but longest long story short, there’s just options. There’s just a lot of options. So while I’d love to say that my decisioning was incredibly science-based, and I talked to Lina Khan and had a chance to go around the world, I just felt that there was enough optionality. Heck, if Japan pushed it through, it felt like they were the one that had the most to lose in the deal like that.
Patrick Moorhead: Yeah, isn’t that odd? That’s a great observation. I didn’t even think about that. Yes.
Daniel Newman: So with all that in mind, I think they knew there just wasn’t enough to push and to fight. So anyways, that’s it. Good for Microsoft. There is an appeal. I guess that means it’s not technically done, but at some point, they’re going to have to take the ropes off and let this thing get done, let this thing go through, as it should, as it is, as it will, as it was.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
