Skip to main content

Microsoft reportedly reassures staff its gaming strategy will continue if Activision Blizzard buyout fails

And Activision says it'll continue as an independent company.

Microsoft + Activision Blizzard King
Image credit: Microsoft

What happens if Microsoft's proposed $69bn buyout of Activision Blizzard falls through, as seems distinctly possible following the Competition and Markets Authority's shock decision to block the deal?

It's a question Xbox boss Phil Spencer reportedly answered to staff at an all-hands meeting on Thursday, according to Bloomberg (paywall).

According to Bloomberg, Spencer stressed Microsoft remains committed to getting the deal over the line while acknowledging the damaging impact of this week's events. The company, alongside Activision Blizzard, plans to appeal.

Newscast: Can Microsoft's Activision Blizzard deal appeal succeed?Watch on YouTube

Spencer apparently told staff the acquisition of Activision Blizzard is meant to speed up Microsoft's gaming plans, but isn't the be-all and end-all of the company's gaming strategy, which would "move ahead" even without the firm behind Call of Duty, World of Warcraft and Candy Crush.

Spencer's comments come at a tricky time for Xbox, which has seen console sales struggle. This week, Microsoft reported gaming revenue down four percent and Xbox hardware revenue down 30 percent. With a lack of big-hitter exclusives in recent years and stalling Game Pass growth on console, Microsoft's buyout of Activision Blizzard was seen as a crucial shot in the arm of its gaming efforts amid tough competition from Sony and Nintendo.

Specifically, Activision Blizzard-owned Candy Crush maker King was viewed as a key component in Microsoft's gaming strategy, which includes plans to launch an app store for games across mobile devices. Microsoft currently has limited gaming presence on mobile.

Meanwhile, Activision Blizzard boss Bobby Kotick, who has heavily criticised the CMA's ruling in interviews this week, addressed the same issue in a chat with CNBC.

Asked whether Activision Blizzard can go it alone should the deal fall apart, Kotick admitted to potential challenges.

"Look, we're a strong company," Kotick insisted. "And I think, you know, whether the deal goes through or not and we have every expectation of it going through but if it does not, we continue to operate as an independent company.

"It just gets more challenging when you're operating in a global market where in Japan, you don't have free access to the consumer, where in China, you have to enter into a joint venture to be able to operate.

"You know, fair competition should start in the countries that we operate in, like the UK and the US. And I think that, you know, we should be more focused on things like a reciprocal trade framework that will actually allow us to compete in countries like China and in Japan more effectively. Not preventing competition."

Should Microsoft miss its 18th July merger deadline, it will reportedly owe Activision a $3bn termination fee. Kotick was asked what the company would do with that money, should it get it.

"If it weren't to get done, you know, by the end of the year, I think we'll be sitting on something like $18bn of cash. And, you know, we've, I think if you look at our 30-year history, we have deployed capital for the benefit of our shareholders very well and we'll continue to do that."

What happens next? Microsoft must now seek to prove the CMA mishandled its initial investigation as part of an appeal, which, if successful, would see the case then return to the CMA once again for further deliberation. Here's more on Microsoft's next steps.

Read this next