European Union regulators have approved Microsoft’s $75 billion acquisition of Activision Blizzard, breaking UK and US restrictions on the gaming industry’s biggest-ever deal.
European Union competition chief Margrethe Vestager said on Monday that Microsoft had made a series of concessions to allay its concerns, including allowing all European consumers who bought existing or future Activision games to play on all cloud game streams. The game was streamed on the media provider for 10 years.
Officials in Brussels have a very different view of the cloud gaming market than their British counterparts, with the Competition and Markets Authority believing Microsoft’s concessions were not enough to allay concerns that the deal would cement its dominance in the nascent industry.
“Even if Microsoft did decide to remove Activision’s titles from PlayStation, this would not significantly harm competition in the console market,” the EU said in a statement, although the issue is the focus of U.S. regulators.
Vestager added that she’d be happy to draw a different conclusion from the FTC and the CMA, which argued that Microsoft may use Activision’s titles exclusively for its own cloud gaming service.
“I think it’s really important that we own that decision,” Vestager said. “We think it’s a good remedy and we think it’s good for competition.”
The European Union’s decision to approve the deal removes a major hurdle for Microsoft and Activision, which said they remained committed to a deal that would create the third-biggest company in terms of revenue behind China’s Tencent and Japan’s Sony. game company.
However, it is unclear how the companies will overcome objections from UK and US regulators.
In the UK, Microsoft and Activision are appealing the CMA’s decision, but only on procedural grounds.UK regulator has sought major remedies such as forced sale call of Duty Franchise, a move the company argued would make the deal impossible.
“All options are on the table,” said a person with direct knowledge of Microsoft’s thinking.
Microsoft President Brad Smith said: “The European Commission is asking Microsoft to automatically license popular Activision Blizzard titles to competing cloud gaming services. Play these games on any device.”
“EC went through an extremely thorough and deliberate process to gain a complete understanding of the game,” said Activision Blizzard CEO Bobby Kotick.
After criticizing the CMA’s decision and suggesting it showed the UK was “clearly closed to business”, Kotick said: “We intend to meaningfully expand our investment and workforce across the EU. . . We want these teams to grow and prosper, Because their government has taken a firm and pragmatic approach to the game. “
The EU decision came amid opposition from other groups, mainly Japan’s Sony, which accused Microsoft of misleading regulators into promising access call of Duty to other platforms. The EU does agree with UK authorities that the dominance of Sony’s PlayStation removes any competition concerns from deals in the console market.
Microsoft already has licensing deals with cloud gaming platforms including Nvidia’s GeForce Now, and has pledged to extend the same rights to any future companies that launch competing services over the next decade.
None of the games produced by Activision Blizzard are available on cloud platforms, so the European Commission hopes the proposal will promote competition in a “very limited” but “growing” and “innovative” segment of the market.
The move comes amid heightened scrutiny of big tech deals by antitrust agencies around the world. “Regulators want to signal that the tech party is over,” one regulator said, referring to Britain’s earlier blocking of the deal.
After dismissing concerns about potential harm to the console market, Vestager said the main focus of its investigation was the deal’s impact on cloud gaming.EU finds Microsoft withdrawal too damaging to Activision profits call of Duty From the PlayStation console, which outsold the Xbox four to one in Europe.
An EU official said the CMA “overstated” Microsoft’s share of the cloud game streaming market, suggesting that the 60% to 70% estimate cited by the U.K. regulator in its final ruling included many subscribers to Microsoft’s Game Pass subscription service, They do not actually use the product’s cloud gaming capabilities.
“For us, this is not an independent market, but a part of the overall (video game) market,” the official said.
To go ahead with the deal, Microsoft and Activision Blizzard must now defeat US and UK regulators in court. In the UK, both companies have hired top barristers to defend their cases at the Competition Appeals Tribunal, which will analyze the agency’s decision-making process to determine whether the CMA’s decisions are lawful.
In the U.S. case, the FTC’s argument remains focused on consoles, though both the U.K. and now the EU agree the deal poses limited risk to Sony given PlayStation’s dominant market share.