Microsoft’s acquisition of Activision Blizzard has received a significant boost as the European Union (EU) regulators have given their approval to the $68.7 billion deal. The decision comes just weeks after the UK’s Competition and Markets Authority (CMA) blocked the acquisition, dealing a blow to Microsoft’s plans. The EU’s approval was granted after Microsoft made concessions related to cloud gaming, addressing concerns about potential competition issues.
The European Commission found that Microsoft’s acquisition of Activision Blizzard would not hinder competition in the console market, as Microsoft would have no incentive to withhold Activision’s games from Sony. Even if Microsoft were to withdraw the games from PlayStation, it would not significantly harm competition in the consoles market. However, the EU regulators did identify potential competition concerns regarding the distribution of PC and console games through cloud gaming services.
To address these concerns, Microsoft offered 10-year licensing deals to competitors, ensuring that European gamers would have the right to stream any Activision Blizzard game they own via any cloud gaming service of their choice. Cloud gaming providers in the region would also receive a free license to host Activision Blizzard games on their platforms. These licensing agreements, which apply globally, aim to promote competition and provide more opportunities for growth in the cloud gaming market.
The EU’s decision stands in contrast to the UK’s CMA, which rejected the deal last month due to concerns about reduced innovation and limited choice for gamers in the cloud gaming market. Microsoft is currently appealing the CMA’s decision. While the EU’s approval strengthens Microsoft’s position, the company still faces regulatory battles in the US and UK. Regulators in several other countries have already approved the deal, while others are still reviewing it.
The next major challenge for Microsoft is the legal action by the US Federal Trade Commission, which sued to block the deal. The case is currently in the document discovery stage, with an evidentiary hearing scheduled for August 2nd. Meanwhile, Activision Blizzard CEO Bobby Kotick welcomed the EU’s approval and expressed the company’s intention to expand investments and workforce throughout the EU.
Despite the EU’s approval, the CMA stands by its decision and argues that Microsoft’s proposals would give the company control over the cloud gaming market for the next decade, replacing a free and competitive market with regulated terms and conditions. The CMA’s disagreement highlights the ongoing complexity surrounding the deal and the varying perspectives of different regulatory authorities.
While the EU’s decision is a significant step forward for Microsoft, the company’s appeal process in the UK and the legal battle in the US still lie ahead. The outcome of these challenges will ultimately determine the fate of Microsoft’s acquisition of Activision Blizzard.