On May 15th, EU regulators approved Microsoft’s proposed $68bn acquisition of US gaming giant Activision Blizzard, a clear departure from the UK’s decision to block the deal in April, 2023.
Microsoft offered concessions to its original acquisition demands to appease European competition authorities. The company’s remedies in the nascent area of cloud gaming removed antitrust concerns, the European Commission said.
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Regulators in various jurisdictions including the UK and the US are concerned that Microsoft may make Activision games exclusive to its own platform.
Activision Blizzard is behind some of the most successful game franchises in the world, which would make total exclusivity to Microsoft an issue for competitors – like rival Sony’s platform, the PlayStation 5.
However, the EU concluded that the console market will not be affected by the acquisition, due to Sony’s dominance in the market and Microsoft’s sales lagging so far behind.
In terms of cloud gaming concerns, the EU said Microsoft’s proposed remedy of allowing gamers to stream games on any platform they choose alleviates any competition issues.
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By GlobalDataMicrosoft currently makes up around 60-70% of global cloud gaming services.
“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,” said an EU spokesperson.
The go-ahead from Europe comes after months of investigation into the acquisition from regulators across the globe. With concerns of competition disruption to the cloud gaming and console market at the forefront of regulators’ minds.
UK refuses to move on its decision
The UK Competition and Markets Authority (CMA), which blocked the deal last month, has continued to stand by its decision.
Sarah Cardell, CMA CEO, released a statement following the EU’s decision on Monday.
“Microsoft’s proposals, accepted by the European Commission today, would allow Microsoft to set the terms and conditions for this market for the next ten years,” Cardell said.
Adding: “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.”
Microsoft is currently preparing its case after appealing the CMA’s decision last month. It is likely the company will propose the same remedies that resolved the issue with European regulators.
“The European Commission’s decision leaves clear blue water between it and the UK CMA in their assessment of whether competitive concerns as to the future of the cloud gaming market could properly be dealt with through behavioural commitments offered by the parties,” Alex Haffner, competition partner at law firm Fladgate, told Verdict.
Microsoft’s antitrust worries far from over
Although decisions have been reached in what has been a drawn-out and tumultuous acquisition attempt – some experts have suggested this could be a long way from the end.
Gareth Mills, a partner at law firm Charles Russell Speechlys, told Verdict: “The saga is unlikely to come to an end anytime soon with a legal complaint refiled last week in the Californian courts by gamers seeking an injunction.”
Mills also noted the ongoing appeal of the CMA’s decision to block the deal by Microsoft, as well as the US Federal Trade Commission’s case against the acquisition which remains pending.
“The divergence of the EU Antitrust regulator’s approval for the Microsoft Activision acquisition from the decision of the CMA some three weeks ago may on the face of it seem surprising,” Mills added.
“However, it is worth noting that the EU’s approval is based on Microsoft agreeing to enter into licensing deals with rivals and with other behavioural remedies for future conduct providing regulatory safeguards.”
GlobalData is the parent company of Verdict and its sister publications.
