Microsoft has scored a big win this week as it gets approval from the European Commission for its proposed acquisition of Activision Blizzard, just like the earlier reports said. While the tech giant still faces an uphill battle, it can now scratch off the EU Commission from its list of roadblocks.
Microsoft’s $69 billion deal to purchase video game publisher Activision Blizzard has finally gotten the green light from the EU Commission. This comes after months of investigations and meetings between the parties for and against the deal.
In its ruling, the EU regulators found that Microsoft "would have no incentive to refuse to distribute Activision’s games to Sony", while adding "even if Microsoft did decide to withdraw Activision’s games from the PlayStation, this would not significantly harm competition in the consoles market." EU regulators believe that it is unlikely that Microsoft would stop offering Activision Blizzard titles like Call of Duty on the PlayStation as it would impact profits.
The EU Commission also said that in the event that Microsoft opts to pull Call of Duty from PlayStation consoles, Sony would still remain competitive in the market. According to regulators, Sony would simply "leverage its size, extensive games catalogue, and market position to fend off any attempt to weaken its competitive position."
Similar to the UK CMA, the EU Commission found the deal could harm competition in the cloud gaming service segment. However, EU antitrust regulators believe that the market is still "very limited today." The EU Commission also said that the deal could actually "promote its growth."
"These commitments fully address the competition concerns identified by the Commission and represent a significant improvement for cloud game streaming compared to the current situation," the European Commission said. "They will empower millions of EEA consumers to stream Activision's games using any cloud gaming services operating in the EEA, provided they are purchased in an online store or included in an active multi-game subscription in the EEA."
It adds, "In addition, the availability of Activision's popular games for streaming via all cloud game streaming services will boost the development of this dynamic technology in the EEA. Ultimately, the commitments will unlock significant benefits for competition and consumers, by bringing Activision's games to new platforms, including smaller EU players, and to more devices than before."
Unsurprisingly, the UK CMA disagrees with the EU Commission’s ruling on the merger between Microsoft and Activision Blizzard. According to the UK regulator, the decision allows Microsoft to rule the cloud gaming market for the next ten years.
"Microsoft's proposals, accepted by the European Commission today, would allow Microsoft to set the terms and conditions for this market for the next 10 years," the CMA said. "They would replace a free, open, and competitive market with one subject to ongoing regulation of the games Microsoft sells, the platforms to which it sells them, and the conditions of sale.
"This is one of the reasons the CMA's independent panel group rejected Microsoft's proposals and prevented this deal. While we recognise and respect that the European Commission is entitled to take a different view, the CMA stands by its decision."
The UK, US and European competition authorities are unanimous that this merger would harm competition in cloud gaming.
The CMA concluded that cloud gaming needs to continue as a free, competitive market to drive innovation and choice in this rapidly evolving sector.
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— Competition & Markets Authority (@CMAgovUK) May 15, 2023
Activision Blizzard has welcomed the decision by the EU Commission.
"The EC conducted an extremely thorough, deliberate process to gain a comprehensive understanding of gaming," Activision Blizzard CEO Bobby Kotick said in a statement. "As a result, they approved our merger with Microsoft, although they required stringent remedies to ensure robust competition in our rapidly growing industry.
"We intend to meaningfully expand our investment and workforce throughout the EU, and we’re excited for the benefits our transaction brings to players in Europe and around the world... Our talented teams in Sweden, Spain, Germany, Romania, Poland and many other European countries have the skills, ambition, and government support needed to compete effectively on a global scale. We expect these teams to grow and prosper given their governments' firm but pragmatic approach to gaming."
Microsoft will still have a tough road ahead as it deals with the UK CMA and US FTC. The tech giant is working to appeal the CMA’s decision while also tackling the FTC lawsuit. It will take around nine months for the appeal process in the UK to be completed. The first hearing for the FTC lawsuit is scheduled for August.
Sony is yet to comment on the EU Commission's ruling.
