The acquisition of Activision possibly canceled by … Microsoft?

Insiders at Activision fear that Microsoft will cancel the deal.

Some insiders and analysts said Microsoft probably didn’t expect this level of scrutiny from authorities. The mounting pressure has sparked internal disagreements between the two companies, sources familiar with the matter said, even as Activision and Microsoft publicly put on a good show and insist the deal will go through.

At issue are the promises — or lack of promises — that Microsoft is offering to antitrust regulators and rivals like Sony, which has strongly opposed the deal.

Microsoft Gaming CEO Phil Spencer has publicly stated that the company plans to continue releasing Activision’s popular “Call of Duty” series on PlayStation, as well as potentially bringing it to other consoles such as Nintendo. Switch.

But Microsoft has refused to offer EU regulators legal remedies ahead of the full-scale investigation which will start on November 8. Microsoft had the option of offering the EU so-called guarantees, such as a formal promise to keep “Call of Duty on PlayStation”, but refused to do so.

Activision CEO Bobby Kotick would prefer Microsoft to take a more dovish stance on regulators now, since the game maker’s shareholders will be paid whether or not Microsoft makes any concessions.

Some analysts and critics say the option to keep Activision games exclusive is a big part of Microsoft’s lure for the takeover, despite the company’s claims about keeping “Call of Duty” on PlayStation. Making public promises is one thing but being legally required to drop exclusives could be a deal-breaker, sources said.

“Microsoft’s decision to buy Activision is purely to make games exclusive,” said Dan Ives, managing director of Wedbush Securities. “If giving up exclusivity is one of the concessions required, Microsoft is going to have to think long and hard about whether it’s worth it.”

“Microsoft is not buying this asset so other companies can use Activision’s games as if nothing had happened,” Ives added. “It all comes down to what the concessions will be.”

Clay Griffin, research analyst at MoffettNathanson, also said, “Microsoft can’t be forced to agree to draconian terms.”

If the takeover does not go through, Microsoft will have to pay Activision $3 billion.

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