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Microsoft- Activision Blizzard Deal and its Privacy Concerns

Article by Tsaaro

7 min read

Introduction

Many years ago, when kids and young adults would make libraries their second home, the gaming arcades brought in a revolution after which people made these gaming arcades their second homes. Even though this revolution was not welcomed by the elderly, we have seen multiple debates over the aspect of whether video games make individuals violent. Though several findings and statistics have often disregarded this debate, it is essential to understand what gaming, specifically the video gaming industry, has in store. For this, we have a few statistics for you that will give you some insight into how massive this industry is. 

  • By 2025, the worldwide gaming market will reach $256.97 billion.
  • More than 2.5 billion individuals play video games around the world.
  • The growth rate of the console gaming market in 2020 will be the smallest since 2015.
  • The market value of Sony Interactive Entertainment is projected to be $13.4 billion.
  • The audience for eSports is estimated to be approximately 456 million people.

In this article, we will give you insights into the recent acquisition of Activision by Microsoft and what are the multiple aspects that raise concern here, with a particular focus on privacy concerns.

Microsoft’s acquisition of the gaming giant Activision Blizzard, the tech behemoth, has recently made headlines as Microsoft’s biggest buy-in history with a $68.7 billion all-cash deal. While the videogame industry is apprehensive about antitrust, the privacy angle should not be overlooked. The industry is rife with rumours and speculations regarding the intentions of Microsoft. They’re no strangers to antitrust lawsuits and have been dragged to the courts by companies like Netscape in the past. Experts theorise that the deal may have a significant impact on the gaming terrain and stifle competition, hampering the innovation that the industry is known for. 

A brief history of the deal spree that Microsoft has been on

The deal is a manifestation of the rising tendency of big IT businesses to acquire smaller companies in order to assert dominance in the industry. Consumers and smaller competitors in the business suffer as a result of this skewed consolidation of power. Microsoft already controls the famed Xbox console as well as valuable game titles such as Halo, Forza, Age of Empires, and Minecraft. The Activision Blizzard acquisition will be even more significant, as Microsoft’s second large game studio acquisition in less than a year. Microsoft announced in March that it would pay $7 billion for ZeniMax, the parent company of Bethesda Softworks, a prominent gaming studio. Fallout, Doom, and Wolfenstein are among the gaming franchises created by Bethesda. Microsoft is evidently trying to secure a significant portion of the gaming sector. Sony witnessed a drop in stock prices after Microsoft’s news. The alarming thing about the acquisition is that the competition to Microsoft is stretched thin between companies like Sony and Nintendo, which by comparison, stand nowhere in profit margins or market cap. 

The Activision Deal

Microsoft is pushing into new terrain by buying Activision Blizzard, which encompasses smartphone games as well as virtual and augmented reality. According to Microsoft’s release, the acquisition would “provide building blocks for the metaverse”. Microsoft is providing new channels to entice consumers and acquire and exploit consumer data by diversifying gaming over consoles, PC, Cloud, mobile, or even the metaverse. Various types of data are gathered from numerous games. Mobile gaming apps, for instance, can collect information on user browsing habits, including geolocation monitoring. Suppose Microsoft seeks to maximise its metaverse-related virtual and augmented reality game selections. In that case, its data collection is bound to proliferate rapidly, with possibly far more than the biometric data is collected with the now-defunct Xbox Kinect console.

Where is the Privacy concern here?

Microsoft will likely gain far more user data as a result of the Activision Blizzard purchase, adding to the fact that it already has a lot of data on its customers. This is concerning because when a corporation is able to gather huge volumes of data from several channels, all on a single person, the privacy implications associated with data aggregation are amplified. It may also run contrary to the principle of data minimisation as envisaged in Article 5 of the General Data Protection Regulation (GDPR). It becomes fairly easy for that information to slip into the hands of the wrong people, resulting in data exploitation or reidentification. Furthermore, all of that personal and sensitive data will have to be safely kept and adhere to data subjects’ right to erasure or data portability, as and when requested. The GDPR and CCPA demand that customers have more control over their personal data, and data saturation poses a challenge to exercise those rights in a time-efficient manner.

Antitrust and privacy are inextricably linked. As a firm expands in size and influence, its capacity to acquire and use data from people improves. Conversely, the more data a company possesses, the harder it is for competitors to thrive. A more prominent firm, for example, having access to billions of data points on user behaviours and trends, is often better equipped to meet market demand than a small company with fewer inputs. This smothers innovation and exposes customers to greater privacy infractions. Larger firms are usually better positioned to dictate the regulatory and legislative narrative, which has historically assisted huge corporations in dodging privacy regulations.

Conclusion

The Microsoft-Activision Blizzard agreement demonstrates the game industry’s enormous financial possibilities. It does, however, pose specific concerns. Even if the Federal Trade Commission approves the purchase, it’s yet another example of large corporations acquiring smaller businesses in order to consolidate market share. The US government is unlikely to overlook this pattern, implying that further regulation is imminent to combat antitrust and anti-competitive behaviours. There looms a fear over the consumers and the market as a whole, as it is not the first time we are witnessing a monopoly being formed. Microsoft is paying to win, incorporating a strategy that involves shady business tactics and endeavours oriented solely for money-making purposes. As customers and people in general, we’re entitled to an industry that strives to work towards goals that consider data privacy as a paramount cornerstone in a market that fosters creativity and opportunity. And as gamers, we ought to go on quests, cast spells and fight off all sorts of eldritch entities without fretting about what Microsoft intends to do with our personal information.

This article was written by Parul Chaudhary

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