Microsoft bets on next generation of the Internet with acquisition of Activision Blizzard

NEW YORK (NYTIMES) - Microsoft is the dominant force in business software and a giant player in cloud computing. On Tuesday (Jan 18), the company made clear that its ambitions were even bigger, saying it planned to buy powerhouse video game player Activision Blizzard for nearly US$70 billion ($93 billion), in a deal meant to position the company for the next generation of the Internet.

The acquisition, Microsoft's largest ever, would catapult the company into a leading spot in both the video game industry and could strengthen its hand in the nascent world of virtual and augmented reality.

It is also a challenge to regulators in Washington, as Democrats and Republicans alike have pushed to limit the power of technology giants. Microsoft, which makes Xbox consoles and owns studios that produce hits like Minecraft, has expanded its gaming business to surpass US$10 billion in annual revenue.

In anticipation of a longer review, Microsoft said it did not expect the Activision deal to close until the next fiscal year, which ends in June 2023. Activision makes major hits like Call of Duty and Candy Crush, and the takeover would make Microsoft the world's third-largest gaming company by revenue, behind Tencent and Sony, the company said.

The industry has been consolidating rapidly as it increasingly moves deeper into mobile and cloud gaming. The deal could also give Microsoft a significant boost against Facebook, which is considered the leader in the so-called metaverse, the name given to the virtual world.

The metaverse is more of a buzzword than a thriving business, but companies are putting huge sums of money and talent behind the idea. Facebook renamed its parent company to Meta late last year to underscore its commitment.

Adding Activision is a bet that consumers want to play major games anywhere - on phones, consoles, computers and eventually in virtual reality. "Our vision of the metaverse is based on intersecting global communities rooted in strong franchises," said Mr Phil Spencer, vice-president of gaming at Microsoft.

"A big part of that is the fact that mobile is the biggest category of gaming, and it's an area where we have not had a major presence before."

The deal is the largest in the history of the gaming industry, breaking the record set just days earlier when Take-Two Interactive, the creator of games like Grand Theft Auto, purchased mobile game publisher Zynga for more than US$11 billion.