Microsoft’s $69 billion purchase of video game maker Activision Blizzard has been approved by the European Union, with the commission stating that the deal won’t harm competition for popular console titles. The decision was made after Microsoft offered remedies to boost competition in cloud gaming.
However, the deal is still in jeopardy due to British regulators rejecting it and U.S. authorities attempting to thwart it. Microsoft promised to automatically license Activision games to cloud gaming platforms, and the European Commission said that the acquisition would ultimately unlock significant benefits for competition and consumers. T
he deal has been scrutinized by regulators around the world, with fears that it would give Microsoft and its Xbox console control of Activision’s hit franchises. Rival Sony has driven fierce opposition to the deal, and Microsoft sought to counter the resistance by striking a deal with Nintendo to license Activision titles for 10 years and offering the same to Sony if the deal went ahead. The European Commission approved the deal after accepting Microsoft’s offer to modify its licensing agreements to allow users and cloud gaming platforms to stream its titles without paying royalties for 10 years.
In a statement, Microsoft President Brad Smith stated that the licenses would have a global reach, allowing millions of consumers worldwide to play the games on any device of their choosing. Microsoft has already made agreements with Nvidia and Boosteroid to bring Xbox PC games to cloud gaming platforms. Although Activision games are not currently available on cloud services, the licensing commitments could expand the cloud gaming market by introducing Activision’s games to new platforms, including smaller EU players, and more devices than before. The EU decision may benefit Microsoft as it faces regulatory challenges in the U.S., where the Federal Trade Commission is taking legal action to block the deal, with a trial scheduled to begin on August 2.
The approval of Brussels contradicts the decision made by British antitrust regulators, who recently blocked the largest tech deal in history due to concerns about its impact on competition in the small but rapidly growing cloud gaming market.
In response to Microsoft’s proposals being accepted by the European Commission, the Competition and Markets Authority in Britain issued a statement on Monday reaffirming its decision. This unusual move highlights the more assertive approach taken by London.
Sarah Cardell, the chief executive of the authority, stated that Microsoft’s proposals 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. The proposals would enable Microsoft to set the terms and conditions for this market for the next ten years.
The companies are appealing the U.K. decision to a tribunal, but history does not bode well. The watchdog previously denied Facebook parent Meta’s purchase of Giphy over concerns it would limit innovation and competition, and the social media giant was ultimately forced to sell off the GIF-sharing platform after losing an appeal.
According to Deane, the game analyst, if Microsoft’s appeal fails, the company would be compelled to either abandon the deal or treat the U.K. as a separate market, which seems to be an unfeasible option.