Microsoft fired the first shot in the Generative AI arms race when, earlier this year in January, it announced a $10 billion investment in the Chat GPT parent, Open AI. Alphabet Inc. followed suit with Bard; Amazon announced Bedrock. And Apple has been relatively quiet.
Yet, the investment in Open AI isn’t Microsoft’s most significant one in recent times. That investment pales in comparison to Microsoft’s $69 billion acquisition of Activision Blizzard announced in early 2022.
The Microsoft-Activision Blizzard deal, after regular skirmishes with anti-trust regulators in the US, UK and the EU now appears to be on the verge of completion.
Microsoft has long been criticised for its inability to create iconic consumer products (and remains comfortable in its traditional mould of an enterprise technology company).
Funny but true: Xbox is the only pure-play consumer-focused business that Microsoft has!
Microsoft has done well to integrate LinkedIn and GitHub; but the Activision Blizzard acquisition could be its toughest integration act yet.
The deal is pricey, yes, (the acquisition price is about 8x Activision’s 2021 revenues) but Microsoft’s real challenge would be to make Activision’s blockbuster games Candy Crush and Call of Duty available on all screens, including Mobile Screens.
This creates Microsoft’s biggest challenge in this acquisition: the mobile screens are cornered by the Apple – Alphabet duopoly (through the Apple Store and Android Playstore).
This leaves the ‘Enterprise Technology Specialist’ with no choice but to try and build an app store for games on iPhone and Android smartphones.
That App Store from Microsoft, expected to be launched in March 2024, has a lot riding on it!
It’s the key to the successful integration of what is the largest tech acquisitions in recent times.
