The European Commission (EC) has given conditional approval for Microsoft’s $68.7 billion acquisition of gaming giant Activision Blizzard. The decision comes after initial reluctance from the EC due to concerns about Microsoft’s potential market monopoly in cloud gaming. The EC specifically expressed worries about Microsoft withholding Activision games from rival cloud game streaming providers, which could reduce competition in game delivery.
However, Microsoft made certain commitments to address these concerns. They agreed to provide licenses for the “Call of Duty” series to Sony and Nintendo platforms, demonstrating that they did not have a monopoly mindset. Additionally, Microsoft offered two remedies that received approval from the EC. Firstly, they agreed to offer a free license to consumers in the European Economic Area (EEA) to stream all current and future Activision Blizzard games through their chosen cloud game streaming service. Secondly, they committed to providing free licenses to EEA-based cloud game streaming service providers to enable gamers to stream Activision Blizzard games.
These measures ensure that purchasers of Activision Blizzard games have the right to stream them on the cloud game streaming service of their choice, regardless of their device or operating system. The EC believes these remedies will significantly benefit competition and consumers by making Activision Blizzard games available on new platforms and devices. An independent governing board supervised by the European Commission will oversee the implementation of these commitments to ensure Microsoft adheres to them.
The EC is confident that these measures will foster innovation and development in the cloud gaming space while addressing anti-competitive concerns associated with the merger. It is worth noting that the approval is specific to Europe, as Microsoft agreed to comply with these remedies. However, challenges remain as the UK’s Competition and Markets Authority (CMA) recently voted to block the merger, citing similar concerns about competition in the cloud gaming sector.
Regarding consoles, the EC determined that Microsoft has no incentive to refuse to distribute Activision Blizzard games to Sony, the largest seller of console games globally. The EC believes that Microsoft’s withdrawal of Activision titles from Sony’s platform would not significantly deter competition in the console market, as Sony’s size, extensive games catalogue, and market position would allow it to defend its competitive edge.
While much of the focus surrounding the acquisition revolves around Activision’s popular game series, Call of Duty, and Sony’s efforts to prevent Microsoft from dedicating the series to its platform, regulators in the UK and EU are primarily concerned with cloud gaming rather than this specific issue.
The US Federal Trade Commission previously blocked the deal in December, citing concerns about Microsoft’s potential to stifle competition in the Xbox console market and its growing subscription content and cloud gaming business. A trial is scheduled for August 2nd, and both Microsoft and Activision Blizzard face challenges in closing the deal in the UK and US. Nonetheless, the EU approval provides them with additional momentum.