Microsoft levels up in Metaverse with $70 billion Activision deal

Satya Nadella, CEO, Microsoft

It is not every day that a deal close to $70 billion gets struck, only to buy out a gaming company. But the over $2 trillion giant Microsoft finds gold dust in its largest deal ever, as it devours maker of iconic video games like Call of Duty and Candy Crush. Activision Blizzard itself is a $65 billion market cap company. Sitting at the top deck is Microsoft, followed by China's Tencent, which again is a mammoth $550 billion entity.

Microsoft's latest deal with Activision could raise eyebrows over anti-competitive fears. How that will play out is yet to unfold. So far, no one has attempted to build a monopoly in gaming by throwing money to buy out rivals.

Activision too needs a helping hand at this moment. It has fired or edged out over three dozen employees and disciplined another 40 over allegations of sexual harassment and misconduct. However, the troubled CEO Boby Kotick remains at the helm, for now.

The deal also hints at the direction in which Microsoft could be heading in the future. CEO Satya Nadella told employees in a written communication, "Gaming has been key to Microsoft since our earliest days as a company. Today, it’s the largest and fastest-growing form of entertainment, and as the digital and physical worlds come together, it will play a critical role in the development of metaverse platforms." Not too long ago, Facebook CEO Mark Zuckerberg had announced plans for an extensive, ambitious presence in the metaverse. Gaming and entertainment will be a large part of it, he said. Microsoft too is now upping its game and looking to challenge Meta in that domain.

CEO of Microsoft Gaming, Phil Spencer hinted at more synergies and a wider playing field. He said, "Coming together, we can accelerate our mission to extend the joy and community of gaming to everyone. We have the capability and opportunity to build simply the best, most engaging, most fun entertainment ecosystem anywhere."

2022 has well and truly begun with a ground-shaking deal in the gaming space. And it promises to be a fight that'll see Apple, Microsoft, Google, and Meta, go toe to toe. All of them have big plans to release products and software for gaming this year. Goldman Sachs analyst Eric Sheridan wrote earlier, "Large tech platforms are now looking towards augmented reality as the next computing platform shift." Microsoft may be looking to arm itself for the big virtual fight.