I hope the deal gets blocked, but I doubt that will happen considering how much money Microsoft puts into lobbying
regulators en bribery
. Microsoft isn't a company that can be trusted, their entire history lies on opportunism and screwing over the competition instead of leading by innovation.
I think the deal itself will be negative to the industry and will, indeed, grant Microsoft unfair advantage over its rivals.
First off, it will move one of the major publishers in the gaming industry to the hands of Big Tech. Big tech that is already too big to be regulated or scrutinised, Big Tech with which neither Nintendo nor Sony can compete financially.
Secondly, the only companies that can compete with Microsoft financially (Apple, Google, Meta, Amazon...), will be at great disadvantage if they ever decide to expand their gaming/cloud gaming offers, since Microsoft will then already be the owner of massive IP in the gaming segment.
Thirdly they are not only a platform holder when it comes to the Xbox console, they also have a tight grasp on a OS monopoly in the PC world, they have tried to push the Microsoft Store for years without success
. They know there is a lot of money to be taken out of Valve's hands with the sales of gaming software and add-ons (and data) but they also know that PC gamers are very resistant to change and loyal to Steam (Epic Games Store shows this much). By acquiring publishers that make games that are popular among the PC crowd and offering that on Game Pass they will finally have a chance at pulling some PC gamers to their Xbox ecosystem. They also desperately need PC gamers to tap into Game Pass because the PC platform has a huge established audience already while the pool of people that can sign up to Game Pass on console is much smaller and is dependent on the number of consoles sold (area in which they struggle, and will keep struggling, in comparison to PlayStation and Nintendo).
Finally the deal would also allow them to have a presence in the mobile sector with the acquisition of King. Game Pass on mobile is cool and all but those games aren't made to be played on a smartphone and most people don't want the console experience on their phones (because it sucks), King would solve this for them.
And yes, Game Pass will probably never be profitable if you look just at the number of subscribers vs the investment they need to make to put content in there. But Microsoft's goal for the past few years has been to sell services and pull traffic into Azure -> where the big buck of the company is being made!
And Game Pass has a lot of potential to help them there. The data they can collect from Azure traffic is a lot more valuable than subscriptions...
Oh, on a final note. For those who are cheering for the deal because they want COD on Game Pass. Microsoft didn't need to buy Activision for that. They just had to offer a better deal to Activision than the deal PlayStation offered, they certainly have the financial capacity for that but they never cared for it, until now...