Whether it is the FTC or Britain’s Competition and Markets Authority (CMA), I believe these Government agencies often block proposed mergers and acquisitions simply to justify their existence. They are government agencies after all and require taxpayer funds (or printed money) to survive. The CMA’s MSFT decision adds zero value, will hinder innovation, and demonstrates that Government overreach is alive and well.
In the case of the Microsoft / Activision deal, I fail to see how the proposed acquisition would hinder competition and choice in the gaming space.
- Microsoft generated $24.4 billion in cash from operations in its most recent quarter and has generated $58.8 billion in cash from operations fiscal year-to-date. Microsoft is far better capitalized than is Activision and is far better positioned to invest in producing gaming content – including mobile games – than is Activision.
- Microsoft would be foolish to not invest in gaming content post-deal close as gamers tend to flock to hit games much like moviegoers flock to hit movies. Absent investment, Microsoft would cease to produce hit games and therefore would lose gaming customers. MSFT shares would take a hit as a result.
- I don’t agree with the CMA’s logic for blocking the deal. Read the CMA’s press release HERE.