The European Commission (EC) has officially approved the Activision deal, allowing Microsoft’s 69 billion dollar acquisition of Activision Blizzard, the video game titan behind notable franchises like Call of Duty, World of Warcraft, and Candy Crush Saga. Announced in January 2023, this settlement is set to enhance Microsoft’s standing in the fast-growing cloud gaming industry, making it the third-largest game publisher worldwide, following Tencent and Sony.
The permission does, however, come with a few restrictions intended to decrease any potential antitrust issues raised by the EC. Initial concerns from the EC about the merger’s potential impact on cloud gaming—which permits users to stream video games stored on remote servers to their devices without downloading or installing them—were that it might reduce competition in the gaming sector.
The EC was concerned that Microsoft might use its hegemonic status in cloud computing and PC operating systems to censor access to Activision’s well-known games on competing cloud gaming services like Google Stadia, Amazon Luna, or Nvidia GeForce Now. This situation might limit customer choice and innovation in cloud gaming, making it more challenging for new competitors to enter the market.
After conducting a market test, the EC granted Microsoft’s undertakings to ease these worries regarding the EU approved Activision deal. These consist of the following:
- A 10-year license allows European customers who buy Activision PC and console games to stream them for free on any cloud gaming provider.
- A guarantee that Microsoft won’t discriminate against Activision’s games regarding updates, patches, or DLCs, or lower the quality or content of Activision’s games that are made available on rival cloud gaming platforms. A commitment from Microsoft not to obstruct the creation or operation of competing cloud gaming services by using the Windows operating system or the Azure cloud infrastructure.
- Microsoft has pledged to support cross-play and cross-progression features for Activision’s games on various platforms and gadgets.
According to the EC, these commitments “fully address the competition concerns identified by the EC and represent a significant improvement for cloud game streaming compared to the current situation.” Additionally, it stated that “Microsoft’s commitments offered will enable the streaming of such games in any cloud game streaming services for the first time, enhancing competition and opportunities for growth.”
Microsoft has emerged victorious with the EU’s approval of the Activision deal, but the agreement is yet to be finalised. The acquisition is still facing legal hurdles in other countries, including the US and the UK, where it has met opposition from antitrust regulators and consumer organisations.
Using the same justifications as the EU, the UK’s Competition and Markets Authority (CMA) prohibited the agreement in April 2023, claiming that it would give Microsoft excessive control over cloud gaming and hinder both competition and innovation. Microsoft filed an appeal against this ruling, and the Competition Appeal Tribunal is currently hearing its case.
The US Federal Trade Commission (FTC) also launched a lawsuit to block the merger in May 2023, claiming that it would eliminate Activision as a “maverick” rival and lower the innovation and caliber of video games. Microsoft’s proposed remedies, according to the FTC, were insufficient and would not stop the company from using its market dominance to hurt competitors and customers.
In order to defend its purchase of Activision Blizzard, Microsoft has committed to contesting the FTC’s complaint concerning the EU approved Activision deal. According to the corporation, the agreement would assist gamers by bringing more games to more devices and platforms and increasing investment in game innovation and development. Microsoft has also asserted that the video game industry is vibrant and fiercely competitive, with many participants providing a wide range of products and services.
If Microsoft can finalize its largest acquisition and change the face of the video gaming industry, it will depend on the conclusion of these legal disputes. The transaction should be completed by June 2023 if all regulatory permissions are received.
Fact-checks about EU approves activision deal :
- Activision Blizzard’s acquisition by Microsoft has received accurate EU clearance.
- The transaction should be completed by June 2023 if all regulatory permissions are received.
- Similar to the EU, the UK’s Competition and Markets Authority (CMA) vetoed the agreement in April 2023.
- In May 2023, the US Federal Trade Commission (FTC) launched legal action to halt the transaction.
- In order to defend its purchase of Activision Blizzard, Microsoft has committed to contesting the FTC’s complaint.
- If Microsoft can finalize its largest acquisition and change the face of the video gaming industry, it will depend on the conclusion of these legal disputes.