Microsoft is staring at a $3 billion charge should it fail to close the proposed acquisition of Activision Blizzard. The deal has already hit major roadblocks amid regulatory scrutiny around the globe. For example, the Competition and Market Authority of the United Kingdom has already refused to approve the deal over its impact on the cloud gaming space.
Microsoft $3B Breakup Fee
Regulators have raised concerns that a merger between Microsoft and Activision Blizzard will result in a company that other players in the industry will struggle to compete against. While the $3 billion breakup fee looks small compared to the $69 billion that Microsoft is paying for Activision Blizzard, it is still significant. It is the same amount that the software giant paid to acquire Bethesda.
Activin Blizzard has already refuted suggestions that the deal falling through will have a significant impact. The video game giant is already sitting on about $18 billion in cash that it can use to accelerate growth and benefit shareholders.
TikTok Ban Push
Even as Microsoft battles to secure regulatory approval for Activision Blizzard, Chinese networking app TikTok faces an uncertain future in the U.S. The short video app has been the subject of national security concerns. The bone of contention has always been Chinese authorities’ ability to access user data which poses security risks.
During President Donald Trump’s era, there were plans or ban the app completely in the U.S. While President Joe Biden’s Administration scuttled the plans, a potential ban is back on the table on the recommendation of the U.S. House Foreign Affairs Committee. The renewed ban push comes from the parent company ByteDance which handles consumers’ data failing to divest itself of TikTok.
While several states have banned the use of the app on official government devices, a ban by President Biden would be the last nail in the coffin. A total ban would also have ramifications, with Chinese adults saying they would retaliate. Roughly 3 in 5 Chinese adults say they would boycott U.S. companies should the U.S. government impose a total ban on TikTok.
Brewing H1-B Scandal
Meanwhile, a massive scandal involving the coveted H1-B visa for skilled foreign workers has caught the attention of authorities in the U.S. The Biden administration has uncovered evidence whereby small technology companies collude to increase the chances of their prospective foreign hires. The scheme involves the companies entering the same applicants into the lottery multiple times to improve the chances of winning the Visa.
The scheme has allegedly inflated demand for visas to a record high this year, with over 780,000 entries against 85,000 visa slots. The significant increase has been attributed to applicants whose names were submitted multiple times. While it is not illegal for foreign workers to have multiple entries, the companies submitting the applications must prove they have a real job for the applicant. The government is yet to reveal the names of companies involved in the scheme.