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Microsoft's $68.7 billion acquisition of Activision Blizzard has received approval from EU regulators, despite being blocked by UK regulators just weeks ago. The European Commission concluded that the deal can proceed due to commitments from Microsoft related to cloud gaming, marking a significant development in the ongoing regulatory saga surrounding the acquisition.
The EU's decision is based on the premise that Microsoft "would have no incentive to refuse to distribute Activision’s games to Sony" and that even if Microsoft decided to withdraw Activision's games from the PlayStation, it would not significantly harm competition in the consoles market. However, EU regulators, much like their UK counterparts, expressed concerns about the acquisition's potential impact on competition in the distribution of PC and console games through cloud gaming services.
To address these concerns, Microsoft offered 10-year licensing deals to competitors. These licenses, which were proposed to meet the EU's requirements, include significant provisions aimed at preserving competition and consumer choice in the cloud gaming market. One key aspect of the licensing deals is that consumers in EU countries will have the right to stream all current and future Activision Blizzard PC and console games that they have a license for via any cloud game streaming service of their choice. This move is expected to enhance competition and provide more opportunities for growth in the cloud gaming sector.
Microsoft's ongoing efforts to address regulatory concerns have been a focal point in its quest to secure approval for the acquisition. In recent months, the tech giant signed cloud gaming deals with several companies, including Boosteroid, Ubitus, Nvidia, and Nintendo, to allow Xbox PC games to run on rival cloud gaming services. These deals are designed to ensure that competition in the cloud gaming market remains robust and that Microsoft does not gain an unfair advantage.
Despite the EU's decision to approve the deal, Microsoft's legal battle is not over. The company is still appealing the UK's decision to block the acquisition, and it faces ongoing scrutiny from US regulators. The Federal Trade Commission (FTC) filed a lawsuit to block the deal late last year, and the case is currently in the document discovery stage. An evidentiary hearing is scheduled for August 2nd, meaning that the outcome of the case is still months away.
While the EU approval is a significant milestone for Microsoft, the company faces an uphill battle to convince UK and US regulators of the deal's merits. The UK's Competition and Markets Authority (CMA) remains steadfast in its position that the acquisition could harm competition in the cloud gaming market and reduce innovation and choice for gamers. In the face of these regulatory challenges, Microsoft will continue to navigate a complex and uncertain path toward finalizing its acquisition of Activision Blizzard.
