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Why the FTC’s antitrust investigation could spell trouble for Microsoft’s Activision Blizzard acquisition

February 1, 2022, 4:36 PM UTC

If you can manage to peel your eyes away from the green squares of Wordle in its (potentially) last days in front of a paywall, there is plenty of other gaming news worthy of attention.

January delivered three enormous deals: most notably, Microsoft’s $68.7 billion acquisition of Activision Blizzard, the gaming studio behind Call of Duty and Candy Crush. Then there was Take Two Interactive’s $11 billion deal for Zynga (yay Farmville!). And just yesterday, Sony said it would buy Bungie, the video game company behind Destiny and Halo, for $3.6 billion.

It’s been a whirlwind of activity for gamers to keep up with, though it’s unlikely how much it will disrupt day-to-day play, with Microsoft saying they plan to honor pre-existing contracts for games like Call of Duty, and the company owning the rights to Halo.

But it looks as if the Federal Trade Commission could throw a wrench in the mix. Yesterday evening Bloomberg reported, citing a person familiar with the matter, that the FTC has opted to take on the Microsoft-Activision Blizzard investigation, rather than the Justice Department. 

That could spell bad news for Microsoft. The FTC, led by Big Tech critic Lina Khan, has planned to take a more aggressive approach to antitrust policy. So far, the FTC has blocked the Nvidia-Arm acquisition as well as filed a lawsuit to stop Lockheed Martin’s proposed deal with Aerojet Rocketdyne Holdings. It’s currently trying to win a case that would force Meta Platforms to sell WhatsApp and Instagram. Now the FTC has Microsoft’s largest acquisition ever under the microscope—one that would establish the company as the third-largest games publisher in the industry. A deal would also up Microsoft’s subscription offering and better position it for the new frontier in gaming: the metaverse. That is, if it all goes as planned.

The FTC’s Activision investigation will focus on the unity of Microsoft’s consoles and hardware with Activision’s games, and may hone in on whether competitors have access to its games, per Bloomberg. That might be a non-issue if Microsoft does indeed honor all of Activision’s existing agreements and allow gamers to play their titles on Sony’s PlayStation, as it and Sony say.

Regulators in the U.S. and outside of it didn’t take issue with Microsoft’s last deal for ZeniMax Media. But that was before, and regulators say they plan to be more aggressive with M&A and ballooning tech companies these days.

Wardle sells Wordle: So here’s the good news: You may not have to remember to load the same browser link to take a daily pass at a five-letter word. The bad news: You might have to pay the New York Times to play Wordle, as the paper purchased the game for a vague “low-seven figures.” The Times says it will “initially remain free,” but that language is, quite obviously, not so encouraging. Either way, we’re all excited for Josh Wardle. If you’re not, you should be: He developed the game for his partner in an act of quarantine love during a pandemic. Lucky for you addicts he decided to share it.

More M&A: Jokr, a local product delivery service, is looking to sell its New York operations, according to The Information. Potential buyers include GoPuff, Getir, or FastAF. This shouldn’t be surprising, with it as hard as it is to make a dime in the last-mile delivery business. How hard, you ask? Some of these companies are taking a hit of $20 per order. Now that adds up.

See you tomorrow,

Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com

VENTURE DEALS

- Chargebee, a Walnut, Calif.-based subscription management platform, raised $250 million in funding. Tiger Global and Sequoia Capital co-led the round and were joined by investors including Insight Partners, Sapphire, and Steadview Capital

- GWI, a London-based leading audience insights company, raised $180 million in Series B funding led by Permira.

- RenoRun, a Montreal-based e-commerce platform for construction and building materials, raised $142 million in Series B funding led by Tiger Global and was joined by investors including Investissement Quebec, Sozo Ventures, Schneider Electric Ventures, BDC Capital, Fifth Wall, Desjardins Capital, BDC Women in Tech Fund, and Nicola Wealth.

- Athelas, a Mountain View, Calif.--based remote patient monitoring company, raised $132 million in funding. General Catalyst and Tribe Capital led the round and were joined by investors including Sequoia Capital, YCombinator, Greenoaks, Human Capital, and Initialized Capital

- Phantom, a San Francisco-based crypto wallet app for the Solana ecosystem, raised $109 million in funding led by Paradigm.

- Island, a Dallas-based cybersecurity service company, raised approximately $100 million in funding from investors including Insight Partners, Sequoia Capital, Cyberstarts and Stripes.

- League, a Toronto-based healthcare platform technology company, raised $95 million in Series C funding led by TDM Growth Partners.

- Jellyfish, a Boston-based engineering management platform, raised $71 million in Series C funding led by Accel and was joined by investors including Tiger Global, Insight, and Wing Venture Capital

- waterdrop, a Vienna, Austria-based water-based beverages producer, raised €60 Million ($70 million) in Series B funding led by Temasek and was joined by investors including Bitburger Ventures and Founders Future

- Channable, a Utrecht, Netherlands-based ecommerce feed management and PPC automation solution provider for digital marketers, brands and online retailers, raised €55 million ($62 million) in Series B funding led by Partech and was joined by Peak

- Scaler Academy, a Bengaluru, India-based education platform for computer science courses, raised $55 million in Series B funding led by Lightrock India and was joined by investors including Sequoia Capital India and Tiger Global.

- Lunchbox, a New York-based online ordering solution for enterprise restaurant chains and ghost kitchens, raised $50 million in funding led by Coatue and was joined by investors including Primary and 645 Ventures

- Pavilion Data Systems, a San Jose, Calif.-based data analytics acceleration and NVMe-oF platform, raised $45 million in funding led by Kleiner Perkins and Artiman Ventures

- Loadshare, a Bengaluru, India-based B2B logistics company, raised $40 million in Series C funding led by Tiger Global and was joined by investors including Filter Capital, 57 Stars, CDC Group, and Matrix Partners India.

- OLIPOP, an Oakland, Calif.-based tonic beverage company, raised $30 million in Series B funding from investors including Camila Cabello, Priyanka Chopra Jonas, Nick Jonas, Joe Jonas, Kevin Jonas, Mindy Kaling, Logic, Gwyneth Paltrow, and others.

- Deepnote, a San Francisco-based collaborative data science notebook company, raised $20 million in Series A funding. Index Ventures and Accel co-led the round and were joined by investors including Y Combinator and Credo Ventures.

- Launch House, a Los Angeles-based social club for founders and engineers, raised $12 million in Series A funding led by a16z and was joined by investors including Michael Ovitz, Electric Ant, 6th Man Ventures, and Ryan Sean Adams.

- Jobilla, a Helsinki, Finland-based talent acquisition startup, raised €8.25 million ($9.3 million) in funding led by Juuri Partners and Trind VC

- Talkmap, a Dallas, Tex..-based AI-powered conversational intelligence provider for call centers, raised $8 million in Series A funding led by Stage1 Ventures.

- Lost Lake Games, a Seattle, Wash.-based cross-platform game studio, raised $5 million in seed funding led by BITKRAFT Ventures and was joined by investors including Lightspeed Venture Partners, Moon Holdings, and 1Up Ventures.

- Pixm, a New York-based Computer Vision (CV) cyber security startup, raised $4.3 million in seed funding led by Gula Tech Ventures and was joined by investors including FirstIn, AIM13, Chaac Ventures, and Precursor Ventures.

- Passage, an Austin, Tex.-based user authentication platform developer, raised $4 million in funding led by LiveOak Venture Partners and was joined by investors including Next Coast Ventures, Tau Ventures, and Secure Octane.

- NachoNacho, a Los Altos, Calif.-based subscription management platform to help businesses buy and manage cloud-based products, raised $3 million in seed funding led by AltaIR Capital and was joined by investors including Moving Capital, PMC, and s16vc.

- WhoseYourLandlord, a New York-based online landlord rating and reviewing platform, raised $2.1 million in seed funding led by Black Operator Ventures and was joined by investors including New York Ventures, Ben Franklin Tech Partners, Gold Wynn, and Googleʼs Black Founders Fund

- Contraline, a Charlottesville, Va.-based male contraceptive technology company, raised $1 million from Amboy Street Ventures.

PRIVATE EQUITY

- K1 Investment Management invested $350 million in Cyara, a Redwood City, Calif.-based automated customer experience (CX) assurance solutions company.

- Federal Advisory Partners, backed by Sagewind Capital, acquired Favor TechConsulting, a Vienna, Va.-based IT services and solutions provider for federal government agencies. Financial terms were not disclosed.

- Godspeed Capital acquired Savli Group, a Woodbine, Md.-based ServiceNow Software and Information Technology automation solution company for federal agencies. Financial terms were not disclosed.

- SK AeroSafety Group, a Levine Leichtman Capital Partners portfolio company, acquired Fire-Tec Aero Systems, a Phoenix, Ariz.-based maintenance, repair and overhaul (“MRO”) solutions company for the aviation safety equipment industry. Financial terms were not disclosed.

- SVPGLOBAL agreed to acquire Associated Materials, a Cuyahoga Falls, Oh.-based exterior residential building products manufacturer and distributor. Financial terms were not disclosed.

EXITS

 - Infinity Logistics and Transport Ventures agreed to acquire Glencore’s metals warehousing business for $176.7 million.

- RWA Raiffeisen Ware Austria agreed to acquire Patent Co, a Serbian animal nutrition solutions provider, from Abris Capital Partners. Financial terms were not disclosed.

- Silvergate Capital acquired the blockchain-based technology assets of Diem Association, the crypto payments network backed by Mark Zuckerburg.

OTHER

- Cengage Group agreed to acquire Infosec, a Madison, Wis.-based cybersecurity education provider, for $190.8 million.

- Amber Group subsidiary WhaleFin Holdings Japan acquired DeCurret, a Tokyo-based crypto asset exchange subsidiary of DeCurret Holdings. Financial terms were not disclosed.

- Datassential agreed to acquire CHD Expert, a Chicago-based global foodservice data provider. Financial terms were not disclosed.

- Glooko acquired xbird, a Berlin, Germany-based health AI company developing JITAI ( Just In Time Adaptive Intervention) technologies to manage diabetes. Financial terms were not disclosed.

- PointClickCare Technologies agreed to acquire Audacious Inquiry, a Baltimore, Md.-based health information service platform. Financial terms were not disclosed.

IPOS

- Cybereason, a Boston, Mass.-based cloud-based endpoint detection company, confidentially filed for an IPO, per Bloomberg. SoftBank Vision Fund and Alphabet’s Google Cloud unit back the firm. A deal could value the company at more than $5 billion.

- Thyssenkrupp is weighing an IPO for its hydrogen division Nucera, per Reuters.

- Locafy, an Australia-based SaaS online publishing technology platform, filed for an IPO in the U.S. The company posted $1.6 million in revenue in the year ending in June 2021, and reported a $707,673 comprehensive loss.

SPAC

- Byju’s, an Indian online education provider, is weighing going public via SPAC. It is considering at least three blank check companies, per Bloomberg.

- Kalera, an Orlando, Fla.-based leafy green vertical farming company, agreed to go public via a merger with Agrico Acquisition Corp., a SPAC. A deal values the company at around $375 million. 

- Comera Life Sciences, a Woburn, Mass.-based formulation technologies developer for offering protein therapeutics, agreed to go public via a merger with OTR Acquisition Corp., a SPAC. A deal values the company at approximately $258.4 million. 

FUNDS + FUNDS OF FUNDS

- Mercer, a New York-based private market investor, raised nearly $5 billion for a sixth fund focused on private equity, private debt, infrastructure, real estate, and sustainable opportunities.

- AirTree, a Paddington, Australia-based venture capital firm, raised $700 million in funding across three funds.

- Seven Seven Six, a Palm Beach Gardens, Fla.-based venture capital firm, raised $500 million across two funds focused on early stages and growth funding.

- Unlock Venture Partners, a Seattle, Wash.-based venture capital firm, raised $60 million for a second fund to invest in startups in Seattle and Los Angeles. 

PEOPLE

- Blackstone, a New York-based private equity firm, hired David Schwartz as senior managing director of its private equity business. Formerly, he was with Harvest Partners.

- Hamilton Robinson Capital Partners, a Stamford, CT-based private equity firm, promoted Lane Carpenter to principal.

- Morgan Stanley, a New York-based investment bank and asset manager, re-hired S. Sundareswaran as head of mergers and acquisitions in India, per Bloomberg. He had left six months prior to be a partner with Alta Capital.

- Revolution Growth, a Washington, D.C.-based venture capital firm, promoted Patrick Conroy and Kristin Gunther to partners; and Nancy Hilliker, Osman Nur, and Curtis Oberg to vice presidents. 

- SK Capital Partners, a New York-based private investment firm, hired Anne Kolton as Chief Sustainability Officer. Formerly, she was with the American Chemistry Council.

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