EU approves Microsoft’s $69bn takeover of Activision Blizzard

European Union regulators have approved Microsoft’s proposed $68.7 billion deal to acquire Activision Blizzard, clearing a major hurdle after the UK blocked the deal less than a month ago.

The EU green-lit the deal after Microsoft made commitments related to cloud gaming.

“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 EU said in a notice on Monday (May 15).

The EU concluded that Microsoft would have no incentive to withhold Activision’s games from Sony — including in the European Economic Area (EEA) — and even if it did, it would not significantly harm competition in the console market. 

In Europe alone, there are four Sony PlayStation consoles for every Microsoft Xbox console bought by gamers, said the European Commission, the EU’s executive arm.

“Indeed, Microsoft would have strong incentives to continue distributing Activision’s games via a device as popular as Sony’s PlayStation,” said the Commission.

The statement came as Sony had raised its concerns about the Microsoft-Blizzard deal. In March, the Japanese company submitted a document to the UK’s Competition and Markets Authority (CMA), saying it is worried that Microsoft could raise the price of Call of Duty or make it only available on its own Xbox Game Pass subscription service.

The EU, in handing down its decision, noted that even if Call of Duty is largely played on console, it is less popular in the EEA than in other regions of the world.

However, EU regulators did find that the takeover could hurt competition in the distribution of PC and console games through cloud game streaming services. 

EU regulators have warned that if Microsoft made Activision’s games exclusive to its own cloud game streaming service, Game Pass Ultimate, and withheld them from rival cloud game streaming providers, it would reduce competition in the distribution of games via cloud gaming. 

Additionally, if Microsoft hinders or degrades the streaming of Activision’s games on PCs using operating systems other than Windows, the company could strengthen Windows’ position in the market for PC operating systems.

Microsoft has proposed remedies to address these concerns, including licensing deals that the company plans to offer to competitors for a period of ten years.

“The commitments offered by Microsoft will enable for the first time the streaming of such games in any cloud game streaming services, enhancing competition and opportunities for growth.”

Margrethe Vestager, European Commission

The licensing deals include a free license for EU consumers to enable them to stream current and future Activision Blizzard PC and console games that they have a license for via any cloud game streaming service of their choice. Cloud providers will also be offered a free license to stream these games in EU markets.

“The commitments offered by Microsoft will enable for the first time the streaming of such games in any cloud game streaming services, enhancing competition and opportunities for growth,” said Margrethe Vestager, Executive VP in charge of competition policy at the European Commission.

Vestager added: “Video games attract billions of users all over the world. In such a fast-growing and dynamic industry, it is crucial to protect competition and innovation. Our decision represents an important step in this direction, by bringing Activision’s popular games to many more devices and consumers than before thanks to cloud game streaming.”

Commenting on the EU’s decision, Microsoft Vice Chairman and President Brad Smith, said: “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.”

The EU’s approval clears a big hurdle for Microsoft as it seeks to strengthen its gaming business by gaining access to popular gaming franchises such as Call of Duty and Candy Crush.

In blocking the deal in late April, the UK’s competition regulator said the merger could “alter the future of the fast-growing cloud gaming market,” leading to reduced innovation and less choice for UK gamers in the years to come.

Microsoft can still appeal to the UK’s Competition Appeal Tribunal, an independent judicial body, to reverse the CMA’s decision, Reuters notes. The company has to make an appeal by May 24.

The merger already won approval from Japanese regulators in late March, while a review of the deal is still pending at the US Federal Trade Commission.

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