European Commission Approves Microsoft — Activision Blizzard Deal

The Euro­pean Com­mis­sion has approved Microsoft­’s acqui­si­tion of Activi­sion Bliz­zard, stat­ing that Microsoft­’s com­mit­ment to keep Activi­sion titles on rival plat­forms aid­ed reg­u­la­tors in mak­ing a decision.

Accord­ing to the EU, Microsoft  “would have no incen­tive to refuse to dis­trib­ute Activision’s games to Sony,” and even if they did make those titles exclu­sive, it “would not sig­nif­i­cant­ly harm com­pe­ti­tion in the con­soles market.”

“Even with­out being able to offer this spe­cif­ic game, Sony could lever­age its size, exten­sive games cat­a­log, and mar­ket posi­tion to fend off any attempt to weak­en its com­pet­i­tive posi­tion,” the EU com­ment­ed in a press state­ment. The EU’s approval requires Microsoft to auto­mat­i­cal­ly license Activi­sion Bliz­zard games to com­pet­ing cloud gam­ing ser­vices glob­al­ly, giv­ing con­sumers more options on what plat­form to play these games on. 

The EU did note it orig­i­nal­ly had con­cerns about Microsoft­’s dom­i­nance in the cloud gam­ing mar­ket, and that cloud gam­ing ser­vices could poten­tial­ly hurt future com­pe­ti­tion around the dis­tri­b­u­tion of PC and con­sole games if the acqui­si­tion goes through.

Bob­by Kotick, Activi­sion Bliz­zard’s CEO, react­ed to the merg­er, say­ing it “required strin­gent reme­dies to ensure robust com­pe­ti­tion in our rapid­ly grow­ing indus­try,” which Activi­sion Bliz­zard and Microsoft will com­ply with. “The major­i­ty of the world’s gamers play on mobile phones. Europe has played a piv­otal role in the devel­op­ment of gam­ing, espe­cial­ly mobile gam­ing, and we expect Euro­pean game devel­op­ers will con­tin­ue to dri­ve growth and inno­va­tion,” Kotick said in press release.

The deal was recent­ly blocked by the UK, over con­cerns over cloud gaming.

The CMA has respond­ed to the EU’s approval of the deal, claim­ing that Microsoft will be able to “set the terms and con­di­tions” for the mar­ket for the next decade.

“The UK, US, and Euro­pean com­pe­ti­tion author­i­ties are unan­i­mous that this merg­er would harm com­pe­ti­tion in cloud gam­ing,” the CMA tweet­ed. “The CMA con­clud­ed that cloud gam­ing needs to con­tin­ue as a free, com­pet­i­tive mar­ket to dri­ve inno­va­tion and choice in this rapid­ly evolv­ing sector.”

“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 rec­og­nize and respect that the Euro­pean Com­mis­sion is enti­tled to take a dif­fer­ent view, the CMA stands by its decision.”

Microsoft plans to appeal the block, with both them and Activi­sion Bliz­zard retain­ing heavy­weight lawyers, while the UK gov­ern­ment has also unveiled its “smarter reg­u­la­tion” to fos­ter a more com­pet­i­tive mar­ket with less “red tape”–potentially help­ing Microsoft with the merg­er in the future.