The European Commission has approved the long-gestating acquisition of Activision Blizzard by Microsoft, with only a handful of caveats related to cloud gaming. In its investigation, the EU determined the proposed deal would not harm rivals in the games market – but did note it could harm competition amongst cloud gaming services.
To address these concerns, Microsoft has offered solutions in the form of 10-year licensing deals that would allow current owners of Activision Blizzard games in the European Economic Area (EEA) free access to cloud versions in future. Cloud game streaming service providers have also been offered this ten-year deal, guaranteeing access to Activision Blizzard games.
Should Microsoft follow through with these proposals, it appears the EU Commission will be satisfied.
‘The commitments fully address the competition concerns identified by the Commission and represent a significant improvement for cloud gaming as compared to the current situation,’ the Commission said.
Read: Xbox acquisition of Activision Blizzard blocked by UK regulator
In short, the EU Commission’s arguments for approving the Activision Blizzard deal were:
- Microsoft would ‘have no incentive to refuse to distribute Activision’s games to Sony, which is the leading distributor of console games worldwide’.
- Any potential decision to remove Activision’s games from PlayStation would not significantly harm competition in the EEA as the company’s flagship game, Call of Duty, is ‘less popular in the EEA within its genre compared to other markets’.
- Activision would not bring its games to other subscription services ‘even without this transaction’.
Cloud gaming concerns, and the potential for Microsoft to ‘strengthen the position of Windows’ in the PC operating system market, were also raised as red flags – but neither were enough to prevent approval of the deal.
As you’d expect, both Microsoft and Activision Blizzard have praised this decision, and the thorough investigation of the EU Commission.
‘The European Commission has required Microsoft to license popular Activision Blizzard games automatically to competing cloud gaming services. This will apply globally and will empower millions of consumers worldwide to play these games on any device they choose,’ Brad Smith, President of Microsoft said on Twitter.
‘Careful regulators in numerous other countries have already approved the merger. By joining them today, the EC has once again demonstrated their rigorous, fair and sensible approach with the creation of appropriate regulatory guardrails that ensure competition in important growth industries,’ Bobby Kotick, Activision Blizzard CEO said.
‘There is still work to be accomplished before our merger can be finalised but it is encouraging that regulators like the European Commission understand and appreciate the considerable growth opportunities provided by our industry.’
At this stage, it’s unclear how the EU Commission ruling will impact the recent decision of the UK Competition and Markets Authority (CMA) to block the deal outright. In a response to the EU’s decision, the CMA suggested this approval was flawed, as it believes the conditions provided would still allow Microsoft to set terms for the future of cloud gaming.
‘The UK, US and European competition authorities are unanimous that this merger would harm competition in cloud gaming,’ the organisation said. ‘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.’
‘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.’
We’ll likely hear more about these oppositions, and potential resolutions, in the coming months.
