Microsoft's $69bn acquisition of Activision Blizzard has been approved by EU regulators after Microsoft offered some commitments related to cloud gaming. However, the deal is still blocked by UK regulators who have concerns about the impact on competition and innovation. Microsoft is appealing that decision, but the approval in the EU is a major step towards winning that appeal.
The EU forced some concessions on Microsoft and the company decided to comply. Following those concessions and the EU approving the deal, the European Commission (EC) says the merger will now create more competition and also flexibility for consumers:
“Our decision represents an important step in this direction, by bringing Activision's popular games to many more devices and consumers than before thanks to cloud game streaming,” says Margrethe Vestager, executive VP in charge of competition policy at the European Commission. “The commitments offered by Microsoft will enable for the first time the streaming of such games in any cloud game streaming services, enhancing competition and opportunities for growth.”
As mentioned, Microsoft offered some commitments related to cloud gaming to address the EU regulators' concerns. These commitments include:
- A free license to consumers in EU countries that would allow them to stream via “any cloud game streaming services of their choice” all current and future Activision Blizzard PC and console games that they have a license for.
- A free license to cloud providers to stream these games in EU markets. Also a global license that will not be free for cloud providers outside of the EU.
- These licenses mean that consumers in EU countries will have a right to stream Activision Blizzard games they've purchased or subscribe to on “any cloud game streaming service of their choice and play them on any device using any operating system.”
“The European Commission has required Microsoft to license popular Activision Blizzard games automatically to competing cloud gaming services. This will apply globally and will empower millions of consumers worldwide to play these games on any device they choose.” – Brad Smith, Vice Chair and President.
Microsoft Still Has Regulatory Hurdles to Clear
UK regulators blocked the deal because they had concerns about the impact on competition and innovation in the cloud gaming market. The Competition and Markets Authority (CMA) said that “Microsoft already enjoys a powerful position and head start over other competitors in cloud gaming and this deal would strengthen that advantage giving it the ability to undermine new and innovative competitors.” They also said that Microsoft's plans to address their concerns were not effective and would have replaced competition with ineffective regulation. Microsoft is appealing the decision.
The decision came as a surprise as the CMA had previously suggested it was happy with Microsoft's concessions. One of the main concerns about the acquisition was Microsoft taking control of the Call of Duty franchise. While Activision Blizzard has other major brands, such as Diablo, Warcraft, and Candy Crush, Call of Duty is the all-conquering game-changer with $30bn+ is lifetime revenue. Following the CMA's ruling, Microsoft went to war with the UK and declared the country closed for business.
Even so, the CMA took a harsh stance considering Microsoft presumably provided the same concessions it did to the European Commission. Those commitments included the company striking 10-year agreements with Nintendo, GeForce Now, Boosteroid, EE in the UK, and others that will keep Call of Duty available across platforms. The company has said that Sony has a similar deal on the table. Although, Sony has been completely against the merger and even said Microsoft would sabotage Call of Duty – which the company deems irreplaceable – on PlayStation.
It is worth remembering the FTC has already been clear it is against the deal and is currently suing Microsoft to try and prevent it from going through. The outcome of that lawsuit could define whether the acquisition moves ahead or not. If the FTC relents and approves the merger, and with the EC already on board, there is a chance that the CMA will change its mind or Microsoft stands more chance of winning the appeal.
You can keep track of all aspects of this deal, past, present, and future by checking out our Microsoft Activision Blizzard merger timeline stories. Alternatively, check out Microsoft's official hub.