The Verge: “Microsoft’s Activision Blizzard acquisition approved by EU regulators”

The European Commission has identified remedies to allow for the deal to go ahead through 10-year licensing deals that Microsoft has offered to competitors. These 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. Cloud providers will also be offered a free license to stream these games in EU markets.

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While Activision Blizzard CEO Bobby Kotick welcomed the EU approval and says the company intends to meaningfully expand our investment and workforce throughout the EU, the CMA defended its own position.

The UK, US and European competition authorities are unanimous that this merger would harm competition in cloud gaming, says the CMA in a statement. 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 recognize and respect that the European Commission is entitled to take a different view, the CMA stands by its decision.

Tom Warren

I haven’t followed this story particularly closely, but this split decision with an approval from the European Commission and a rejection by the UK’s CMA reflects the challenges of regulating mergers and acquisitions when the companies have gone global, but the regulators are still confined to a single country or region. It will be interesting to see how things proceed if, after appeals and the pending trial in the US, the deal will remain only partly approved, with some regulators giving the go-ahead, while others opposing it. The US decision will probably weigh in most heavily, as both companies are based there, but there are precedents where a smaller country has prevented a deal, like Facebook being ordered by the UK competition authority to sell the Giphy website last year.

As for the issue in question, whether competition in cloud gaming would be negatively impacted by the acquisition, I think it’s a bit too early to tell. This market is in its infancy and I don’t see it becoming a dominant force within the games industry anytime soon. The early entry and subsequent failure of Google Stadia reflects the challenges of building a successful cloud gaming system. Granted, the market seems tilted towards consolidation, as the massive hardware investments in servers favor larger corporations, and Microsoft has a clear foothold in both cloud and gaming distribution. But in this case I think the licensing deals offered as remedies to competitors would provide a reasonable counterbalance to Microsoft monopolizing popular game franchises.