Microsoft will pay $68.7 billion in cash for the video game maker, which is behind hits like Call of Duty and Candy Crush. It is the largest takeover in Microsoft history and a big bet on its future.
The deal puts Microsoft in the lead in the battle for dominance in the metaverse, the next-generation internet that melds the traditional online world with virtual and augmented reality.
Democrats and Republicans alike have pushed to limit the power of technology giants, which is a challenge to regulators in Washington.
Microsoft appears to be rebuffing a controversy about the game maker's workplace culture after buying a company that faced accusations of sexual harassment and discrimination. Since California sued the company in July, its shares have fallen 27 percent. The game maker's shares are going up. Microsoft's shares fell after the announcement.
The transaction may be seen as a victory for Bobby Kotick, the long-time chief executive of the company. Mr. Kotick negotiated a big premium for investors and will continue to run the company.
Microsoft would gain access to some of the world's most popular games, which are expected to form a cornerstone of the metaverse. Combining with Microsoft will allow for access to a lot of artificial intelligence and other programming talent.
It would give Microsoft a boost in its battle with Facebook. Adding a third party could bolster the virtual reality offerings from Microsoft.
Microsoft's chief executive said in a statement that gaming is the most exciting category in entertainment and will play a key role in the development of metaverse platforms.
The deal would change Microsoft. The company has remained focused on its cloud-computing business, despite owning the studios behind Microsoft's Xbox and Halo.
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