Microsoft is scheduled to meet with EU officials next week in a hearing regarding its proposed $68.7 billion acquisition of Activision Blizzard, which is facing antitrust concerns and opposition from rival gaming companies, according to Reuters.
The deal announced early in 20232, would make Microsoft the third-largest gaming company by revenue and would give it control over popular franchises such as Call of Duty, Warcraft, Overwatch and Candy Crush. The European Commission opened an investigation into the deal in November 2022, citing concerns about reduced competition and innovation in the gaming industry.
Microsoft Requests EU Hearing
Microsoft has requested the hearing with EU regulators to present arguments in favor of the deal. The hearing, scheduled for February 21, 2023, will be attended by representatives from Microsoft, Activision Blizzard, and other interested parties such as competitors and consumer groups. The Commission has until April 5, 2023, to decide whether to approve the deal with or without conditions or to block it altogether.
The Microsoft-Activision deal would be one of the largest tech mergers ever and reflects Microsoft's ambition to expand its gaming business and compete with rivals such as Sony, Nintendo, and Google. Gaming is a fast-growing and lucrative sector that has boomed during the pandemic. The pending acquisition raises questions about Microsoft's dominance in other areas such as cloud computing, artificial intelligence, and social media, as Microsoft owns LinkedIn, GitHub, and Skype among other platforms.
EU Regulators vs. Big Tech
The EU has been at the forefront of regulating big tech companies for antitrust violations. It has imposed billions of euros in fines on Google for abusing its market power in online advertising and shopping comparison services. It has also launched probes into Amazon's use of data from third-party sellers and Apple's App Store practices.
Microsoft said it believes that “the combination of our two companies will bring more fun for everyone” and that it is “committed to making gaming more accessible for people everywhere”. Activision Blizzard said it welcomes “the opportunity to share our perspective with regulators on why this combination will be good for gamers” and that it remains “confident that we will receive regulatory approvals”.
The European Commission said it has “serious doubts” that the deal would comply with EU merger rules because “the merged entity would have a very high market share” in several segments of gaming such as first-person shooter games (FPS) or massively multiplayer online role-playing games (MMORPG).
Concerns by Competitors
Some rival gaming companies such as Electronic Arts (EA), Ubisoft, and Take-Two Interactive have reportedly expressed concerns about the deal's impact on competition. They fear that Microsoft could use its cloud platform Azure or its subscription service Xbox Game Pass to favor Activision Blizzard's games over theirs.
The hearing next week will be an opportunity for Microsoft to convince EU regulators that its acquisition of Activision Blizzard will not harm competition or consumers. However, the hearing is not binding on either side and does not guarantee a positive outcome for Microsoft. The Commission could still decide to block the deal or impose remedies such as divesting some assets or granting access to competitors. Microsoft could also appeal any negative decision by the Commission to the EU courts, but this process could take years and delay the completion of the deal.
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