Dividends and Microsoft’s deal to buy Activision Blizzard will limit competition and hurt gamers: British watchdog

All companies both big and medium sized will decide if they want to grow, both organically or by purchasing another company. In this fashion the larger companies tend to get bigger if their acquisitions work out. Somctimes the perfect deal on paper works, sometimes it does not for a variety of reasons. One of the advantages large companies have or supposed to have is they have access to lawyers and lobbyists in all the countries the company operates in. However people are people in every country and they have biases and they see the advantages and disadvantages of the bigger company. A good example is Microsoft wishing to buying Activision Blizzard.

In an article by Kelvin Chan of the Associated Press, the $68.7 billion deal is stalled because the British Competition and Markets Authority (CMA) came out with a statement the deal will stifle competition and hurt gamers. The bureau found the deal would strength Microsoft’s position in the growing cloud gaming market. In the cloud gaming market, gamers stream games on mobile phones and handheld devices they already own. This could result in higher prices, fewer choices and less innovation.

Microsoft’s deputy general counsek, Rima Alaily, said the company is committed to offering effective and easily enforceable solutions that address the CMA’s concerns.

This means the British antitrust investigation is set to drag out for a few more months. Microsoft was hoping the British CMA would have a favorable outcome and they would use the outcome at the US Federal Trade Commission (FTC) hearings.

William Kovacic, a former FTC Chair and now a law professor at George Washington University, noted the good news was the British did not prohibit the deal leaves a opening for further discussion.

Linking to dividend paying stocks, one of the reasons why people buy the companies is the companies have a moat, which can tend to limit competition and the ability to raise prices or keep up margins. As a consumer agencies, these elements are not the best in the world, but as an investor you like them. The gaming industry is bigger than the movie industry, which means Microsoft will have to continue to come up with very popular games and in a few years change pricing strategies.

There are more questions than answers, till the next time – to raising questions.


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