In a surprising turn of events at the recent court battle between Microsoft and the US Federal Trade Commission (FTC), it was revealed that the tech giant once considered acquiring mobile gaming company Zynga. This revelation came to light as the FTC continues its efforts to halt Microsoft’s $69 billion acquisition of Activision Blizzard.
Phil Spencer, the head of Xbox at Microsoft, confirmed during his testimony that Microsoft had seriously considered buying Zynga to strengthen its position in the mobile gaming industry. The company dedicated significant time and resources to this potential deal.
However, Microsoft eventually decided against the Zynga purchase. Instead, it redirected its attention and resources toward the acquisition of Activision Blizzard, which notably owns King, the company behind the immensely successful Candy Crush mobile games.
Spencer shared, “I spent time with Amy Hood, the CFO of [Microsoft], to look at the mobile opportunities that were in the market, and Activision was the biggest publisher of mobile content. And it’s a partner we know well, given a long history of working together, so we both had comfort with the studios and the teams. But most important was their portfolio and engagement they had on mobile.”
Zynga was later bought by Take-Two Interactive for $12.7 billion in early 2022. Activision Blizzard, on the other hand, had already acquired King back in 2016. As of the first quarter of 2022, games from King boasted a total of 250 million monthly active users.
Microsoft’s shift of interest in mobile gaming could be seen as part of the company’s strategic repositioning in the gaming industry. Recently, Microsoft publicly admitted its defeat in the console wars, with Xbox consistently ranking third behind Sony’s PlayStation and Nintendo. Despite this, Microsoft remains undeterred, aiming to gain profitability by selling consoles at a loss and subsequently recouping revenue through game and accessory sales.
The FTC’s attempt to place a preliminary injunction on Microsoft’s Activision Blizzard acquisition adds another level of complexity to the company’s current strategic movements. If the injunction is granted, Microsoft might be forced to abandon the deal, significantly impacting its standing and strategy in the gaming market.
While Microsoft maintains that the acquisition of Activision Blizzard is a necessary step in staying competitive against Sony and Nintendo, regulators express concerns about Xbox’s potential domination of the games market. The outcome of this legal battle will undoubtedly have a significant effect on the future of the gaming market.
This case has garnered global attention, not just because of the substantial economic implications, but also due to the precedent it could set for future acquisitions within the gaming industry. With both the FTC and the UK’s Competition and Markets Authority challenging the merger, the world waits with bated breath to see how this gaming saga will unfold.