Microsoft’s Nvidia Acquisition Deal Fix

Google and Nvidia have both provided the US Federal Trade Commission with objections to Microsoft's attempted acquisition of Activision Blizzard, Bloomberg report. The FTC opted last month to sue Microsoft to block the acquisition, arguing that the deal would suppress competition.

Microsoft’s Nvidia Acquisition Deal

A new report from Bloomberg has revealed that Google and Nvidia reportedly have concerns about Microsoft's unfair advantage in the cloud market if the Activision-Blizzard acquisition deal comes to pass, which is similar to Sony's opposing stance on the matter.

In fact, Xbox head Phil Spencer previously pointed to Activision Blizzard's mobile King division as the keystone of the intended acquisition, and filings connected to the deal have revealed that Microsoft wants to use King to create a new "xbox Mobile Platform."

Nvidia and Google join Sony as major companies bringing issues forward to governing bodies about the acquisition, though based on the tone, these latter two are coming in notably softer on the issue. Lat elast year, the FTC announced it would sue to block Microsoft's attempted acquistion due to concerns that the deal would harm competition from rival console-makers through exclusivity. The UK's Competition and Markets Authority (CMA) has also raised similar concerns.

While Sony, Nvidia, Google, the FTC, and a number of other companies and governing bodies have expressed their concerns over the deal, Brazil, Serbia, Saudi Arabia, and Chile have approved Microsoft's acquisition of Activision Blizzard already, and it is expected that a number of other countries will follow suit. Nothing is certain at this time, of course, and as more and more parties provide their insight into the deal, the more complicated the whole ordeal becomes.

The Microsoft Activision Blizzard acquisition deal, the largest by Microsoft to crush the future of Facebook (Meta) has hit few roadblocks, which has apparently slowed down the process of completion. The possibility of the deal meeting the same fate as Nvidia-ARM deal can't be ruled out as well.

However, even after 6 months, the Microsoft Activision Blizzard acquisition deal is far from closer as both the companies remain tight-lipped about the progress and challenges that have occurred during the course of the competition.

Smith is trying hard to set the market expectations in regards to the time duration required to close the deal. However, considering the time taken by other tech deals of almost the same size is way beyond reasonable justification. To put things in context, the $67 billion Dell-EMC merger was concluded in 9 months. The more complex Nokia acquisition, albeit smaller in size, was concluded by Microsoft within 8 months only.

When announcing the acquisition, Nvidia and Arm said the deal will create the world's "premier computing company for the age of AI." The duo have pledged to keep Arm in Cambridge and invest heavily in the business.

Following the launch of the RTX 30 series GPUs last year, NVIDIA announced that it had signed a definitive agreement to acquire UK-based chip designer ARM. With the acquisition, NVIDIA plans to create "the leading computing company for the age of AI," but the deal doesn't seem to be going down well with companies like Qualcomm, Microsoft, and Google.

According to a recent report from Bloomberg, Qualcomm, Microsoft, and Google have raised concerns about NVIDIA's acquisition of ARM with antitrust bodies in various regions. The companies claim that the deal would harm competition in the industry by giving NVIDIA complete control of ARM's chip designs. This could eventually result in NVIDIA preventing other chipmakers from accessing ARM's intellectual property.

Although NVIDIA's CEO Jensen Huang has previously promised that the acquisition wouldn't have any effect on ARM's current licensing model, sources familiar with the matter told CNBC that Qualcomm has opposed the deal because it "doesn't think Nvidia will be able to fully capitalize on the acquisition without crossing certain lines that people are worried about."

As Bloomberg reports(Opens in a new window), Nvidia has told the FTC that equal and open access to games is important, but didn't go so far as to oppose the acquisition. Google has also submitted its concerns about the deal, which apparently back the FTC's current stance that the acquisition could allow Microsoft an unfair advantage in the cloud, subscription, and mobile gaming markets.

Apparently, both companies shared information to support the FTC's claim that the acquisition of Activision Blizzard would provide Microsoft with an unfair advantage in the categories of cloud gaming, subscription service, and mobile gaming. However, NVIDIA's position is reportedly slightly different in that the company highlighted the need for equal and open access to all games rather than directly opposing the deal.

Microsoft will likely miss the deadline to finalize the merger with Activision Blizzard. The acquisition should be completed by July 2023 before the parties need to renegotiate the terms of the deal. The trial for the FTC lawsuit is scheduled to begin in August 2023.

Should the acquisition ultimately go through, Microsoft would become owner of some of the industries biggest franchises such as World of Warcraft, StarCraft, Overwatch, and Call of Duty, among others. Microsoft did announce a 10-year deal with Nintendo that would bring Call of Duty back to Nintendo hardware such as the Switch. It offered the same 10-year deal to Sony, though that was reportedly declined.

While all three companies have asked U.S. regulators to intervene in the deal, at least one of them has asked that the acquisition be killed altogether, according to the Bloomberg report, which was based on anonymous sources.

Having NVIDIA and Google somewhat contest the merger is not a good sign for Microsoft at this point. Though the companies are only really expressing some concerns, it only adds a few more obstacles for the tech giant to overcome. Of course, this deal marks one of the largest acquisitions in the history of the entertainment industry, and easily the largest that the gaming industry has ever seen. For perspective, Disney acquired Lucasfilm (and the Star Wars IP) for a little over $4 billion back in 2012. Pushback was always expected, I imagine.

Anyhow, Microsoft needed a hedge in case Nvidia failed to deliver the needed chip. As you can read above, the original terms called for Nvidia to pay back $100 million in cash, and the rest in equity, in the event that Nvidia failed to meet its commitment. Once it delivered and became a strategically important supplier, the deal terms changed to allow Microsoft the right of first refusal in the event that Nvidia was approached for an acquisition, or an investment stake of 30 percent or more.

News of the acquisition surfaced in late December, but it wasn't until Jan. 9 that both companies confirmed the deal. Fungible's team will join Microsoft's data center infrastructure engineering teams, which will focus on DPU services for storage and networking, according to a press release. The price of the acquisition was not disclosed. 350c69d7ab