European Commission approves Microsoft-Activision Blizzard deal

The European Commission announced today that it had approved Microsoft’s acquisition of Activision-Blizzard. While it expressed reservations about the deal, it said Microsoft’s efforts to prove it wouldn’t monopolize the cloud gaming space swayed its decision. It also said that the deal would represent a marked improvement for cloud gaming compared with its current situation, though Microsoft will have to adhere to certain conditions.

The EU Commission says it investigated the acquisition, and found that, while Microsoft likely couldn’t harm rival consoles with the merger, it could potentially muscle out fellow cloud-gaming services and would dominate the PC market. It also noted that it didn’t believe withholding Call of Duty from PlayStation would harm competition in the region, as “it is less popular in the EEA than in other regions of the world, and is less popular in the EEA within its genre compared to other markets.”

The remedies Microsoft offered that the Commission accepted were a free license for EEA consumers to stream Activision games they owned to any cloud gaming service and a corresponding license for cloud providers to allow those consumers to stream their games. The Commission says these measures ensure gamers who purchase Activision-Blizzard-King games “have the right to stream those games with any cloud game streaming service of their choice and play them on any device using any operating system.”

According to the Commission, these measures will help boost innovation and development in the cloud space, and it received positive feedback from other providers. It would also eliminate the anti-competition concerns the merger raised. The merger is permitted in Europe only on the grounds that Microsoft adheres to these remedies.

What comes next

This decision was handed down shortly after the UK’s Competition and Markets Authority voted to block the merger, citing similar concerns as the EU Commission about the competition in cloud gaming spaces. The CMA believes the deal could stifle innovation in the cloud gaming space, where it estimates Microsoft already holds 60-70% of the market. The decision is currently up for appeal.

Margrethe Vestager, the Commission’s EVP on competition policy, said about the acquisition, “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. 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.”

Activision CEO Bobby Kotick said in a statement about the EU’s decision, “The EC conducted an extremely thorough, deliberate process to gain a comprehensive understanding of gaming. As a result, they approved our merger with Microsoft, although they required stringent remedies to ensure robust competition in our rapidly growing industry … . Our talented teams in Sweden, Spain, Germany, Romania, Poland and many other European countries have the skills, ambition and government support needed to compete effectively on a global scale. We expect these teams to grow and prosper given their governments’ firm but pragmatic approach to gaming.”