Microsoft’s attempted $70 billion purchase of Activision Blizzard is one step closer to becoming a reality. The European Commission, under the European Merger Regulation, approved Microsoft’s proposed acquisition of Activision Blizzard.
The EU Commission’s ruling comes weeks after the United Kingdom’s Competition & Markets Authority officially announced opposition to the deal.
“Today’s decision follows an in-depth investigation of the proposed acquisition of Activision by Microsoft,” said the EU Commission in a statement (emphasis in original). “As always, the Commission has based its decision on hard evidence, and on extensive information and feedback from competitors and customers, including from game developers and distributors as well as cloud game streaming platforms in the EU.”
“The European Commission has required Microsoft to license popular Activision Blizzard games automatically to competing cloud gaming services,” said Microsoft Vice Chair and President Brad Smith. “This will apply globally and will empower millions of consumers worldwide to play these games on any device they choose.”
Looking Into the Ruling From the EU Commission
When investigating the ramifications of Microsoft’s acquisition of Activision Blizzard, the European Commission made several discoveries.
First, they ruled that “Microsoft would have no incentive to refuse to distribute Activision’s games to Sony, which is the leading distributor of console games worldwide (emphasis in original).” They also note that PlayStation consoles outsell Xbox at a four-to-one ratio in the European Economic Area (EEA).
They continue, saying that even if Microsoft made Activision games unavailable on the PlayStation platform, it “would not significantly harm competition in the consoles market.”
One significant discovery from the investigation is that regardless of the deal’s outcome, Activision would not make its games available for competing subscription services. The publisher fears cannibalizing game sales should their titles be available on several subscription services.
The EU Commission did express concern about harming competition regarding the distribution of games through cloud gaming streaming services. A proposed remedy includes a comprehensive 10-year licensing agreement. This consists of a free license for EEA consumers, allowing them to stream all current and future Activision Blizzard PC and console games for which they have a license.
“Today, Activision Blizzard does not license its games to cloud game streaming services, nor does it stream the games itself,” the EU Commission explains. “These licenses will ensure that gamers that have purchased one or more Activision games on a PC or console store, or that have subscribed to a multi-game subscription service that includes Activision 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. The remedies also ensure that Activision’s games available for streaming will have the same quality and content as games available for traditional download.”
The Approval Comes in the Wake of Hurdles Against the Deal
Having ruled against the deal, the UK CMA commented on the EU Commission’s decision.
“The UK, US and European competition authorities are unanimous that this merger would harm competition in cloud gaming. The CMA concluded that cloud gaming needs to continue as a free, competitive market to drive innovation and choice in this rapidly evolving sector. Microsoft’s proposals, accepted by the European Commission today, would allow Microsoft to set the terms and conditions for this market for the next 10 years.”
“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. While we recognise and respect that the European Commission is entitled to take a different view, the CMA stands by its decision.”
A chief concern for the UK CMA is the state of cloud gaming should Microsoft officially acquire Activision Blizzard. To address these concerns, Microsoft has been entering agreements with several cloud gaming companies, such as NVIDIA and Boosteroid, to bring Xbox games to their streaming services.
More About Microsoft’s Attempted Purchase of Activision Blizzard
Originally announced in January 2022, Microsoft’s attempted acquisition of the mega-publisher would bring franchises like Call of Duty, World of Warcraft, and Overwatch under the Xbox banner.
Head of Xbox Phil Spencer confirmed that Activision Blizzard games would be available on Microsoft’s Game Pass subscription service if the deal becomes official.
“We intend to make Activision Blizzard’s much-loved library of games – including Overwatch, Diablo and Call of Duty – available in Game Pass and to grow those gaming communities,” Spencer said. “By delivering even more value to players, we hope to continue growing Game Pass, extending its appeal to mobile phones and any connected device.”
Spencer has also confirmed on several occasions his desire to ensure the wildly popular Call of Duty remains a multiplatform release. Microsoft entered ten-year agreements with Valve and Nintendo to ensure the game was released on Steam and Nintendo Switch. In addition, an agreement is on the table with Sony to keep the game on the PlayStation brand, though Sony refuses to sign anything.
This post was produced by Boss Level Gamer and syndicated by Wealth of Geeks.
