• Microsoft plans to buy a video-game company in a deal valued at roughly $75 billion.
  • Experts say the move could solidify its place in an anticipated, more immersive iteration of the internet.
  • It comes after Facebook and other firms have unveiled their own plans for this evolution.

Microsoft was founded a few months after what may have been the first use of the term “internet.” In some ways the two have grown up together. Now, Microsoft wants to enter its next stage of life in lockstep.

The company announced plans on Tuesday to buy video-game developer and publisher Activision Blizzard in a deal valued at about $75 billion, and framed it as a pricey wager that games will be central to a more immersive iteration of the internet that still largely exists only as a buzzword: the “metaverse.”

The size of the deal points to its potential strategic value. Microsoft’s biggest acquisition to date, LinkedIn, cost less than half of the anticipated price.

“The world’s largest tech companies are placing big bets on owning gamers’ attention and wallets and each step signifies an approach to the future of the metaverse,” said Mike Sepso, CEO of esports infrastructure platform Vindex.

Microsoft’s announcement comes after Facebook rebranded itself Meta as part of an overhaul to focus on the metaverse, Nike bought a company that could help it sell virtual sneakers for avatars, and Epic Games provided a “test drive” of how the auto industry may use this novel digital world.

Image: World Economic Forum

These firms are driving a land grab. Many have already conquered the existing version of the internet, reaping billions of dollars in revenue and countless data points coveted by advertisers in the process. Now, they want a head start on the next version.

That next version may not yet be a reality. But as it takes shape, games may play a key role.

Microsoft's acquisition of Activision Blizzard as a metaverse gateway

“There is a stark division in focus among tech and media companies’ view of the assets they need to win the future,” Sepso said. “We now see the incredible stake tech companies hold in the gaming space.”

The Activision Blizzard deal would make Microsoft the third-biggest gaming company in the world by revenue. For a giant that’s occasionally missed out on big trends, at one point making it something of a punchline, now may be the time to move quickly – as games begin to serve as metaverse gateways.

Bill Gates and his future Microsoft co-founder Paul Allen in 1970.
Bill Gates and his future Microsoft co-founder Paul Allen in 1970.
Image: Bruce Burgess, Public domain, via Wikimedia Commons

It’s not certain that Microsoft will be able close the acquisition, however.

The deal is expected to face close antitrust scrutiny, at a time when some think governments should do more to restrain the largest and most influential tech companies.

It’s also not entirely clear what kind of land grab Microsoft’s getting into.

Some of the hype pushing this nascent form of internet has the same whiff of absurdity that pervaded its “Web 1.0” predecessor about two decades ago. A story about someone paying $450,000 for a plot in a virtual world being developed by Snoop Dogg fuelled a recent metaverse news cycle, for example.

There are also valid questions about the logic in luring people further into a virtual world at a time when it may be more important than ever to engage in efforts to shore up the real version – in the face of multiple crises that probably merit more attention than an avatar’s outfit.

More reading on the metaverse and its implications

For more context, here are links to further reading from the World Economic Forum's Strategic Intelligence platform:

  • Human rights in the metaverse – according to this analysis, the technologies that will power the metaverse could continue the march towards ever-more-invasive data collection and surveillance. (Electronic Frontier Foundation)
  • Not long after a real estate investment fund plunked down the equivalent of about $900,000 for a virtual plot of metaverse land last year, according to this piece, it was topped by a $2.4 million purchase. (The Conversation)
  • Microsoft has already been positioning its cloud services to be the fabric of the metaverse, according to this analysis, and other companies are taking full advantage of branded gaming experiences that are essentially immersive sponsorships. (Harvard Business Review)
  • “In a virtual world full of virtual goods, finance could get weird,” according to the author of this piece, who imagines herself writing for a virtual magazine in a virtual office and coveting a Gen-Z copy-editor’s avatar. (The New Yorker)
  • In a place like Thailand, where internet discourse is already rife with political contention, according to this analysis, ideological extremism and disinformation may only further proliferate in the metaverse. (The Diplomat)
  • How I built a virtual reality for my students – this professor had his students interact with each other in avatar form, an experience that’s informed his view of how to responsibly construct the metaverse. (The Conversation)

On the Strategic Intelligence platform, you can find feeds of expert analysis related to the Future of Media, Virtual and Augmented Reality and hundreds of additional topics. You’ll need to register to view.

Image: World Economic Forum