Microsoft’s $69 billion acquisition of video game maker Activision Blizzard has been approved by the European Union (EU), despite facing opposition from British regulators and U.S. authorities. The EU’s approval came after Microsoft offered remedies to address concerns over competition in cloud gaming and promised to automatically license Activision games to cloud gaming platforms.
The European Commission, the EU’s executive arm and antitrust watchdog, stated that the acquisition would not raise competition concerns and would bring significant benefits to competition and consumers. However, analysts suggest that the EU’s approval does not necessarily strengthen Microsoft’s position in overturning the rejection from British regulators.
Regulators worldwide have been scrutinizing the deal due to fears that it would give Microsoft and its Xbox console control over Activision’s popular franchises, such as Call of Duty and World of Warcraft. Sony, the maker of the PlayStation gaming system, has been particularly opposed to the acquisition.
To counter resistance, Microsoft struck a deal with Nintendo to license Activision titles for 10 years and extended the same offer to Sony. The European Commission dismissed the possibility of Microsoft cutting off games from PlayStation, as it would significantly impact its profits.
The EU focused its scrutiny on the emerging cloud gaming market, which allows players to stream games they own to various devices without the need for expensive consoles or gaming computers. Microsoft’s offer to modify its licensing agreements, enabling users and cloud gaming platforms to stream titles without paying royalties for 10 years, played a significant role in the EU’s approval.
The licensing commitments will apply globally and are expected to expand the cloud gaming market, including smaller players in the EU, and make Activision’s games available on more devices than before.
While the EU’s decision may strengthen Microsoft’s position, it contrasts with the stance taken by British antitrust regulators, who rejected the deal last month, citing concerns about competition in the growing cloud gaming market. The Competition and Markets Authority in the UK stands by its decision, emphasizing the need to preserve a free, open, and competitive market.
The companies are appealing the UK decision, but the outcome is uncertain based on previous cases. The regulator previously denied Meta’s acquisition of Giphy, resulting in the social media giant being forced to sell off the GIF-sharing platform.
If Microsoft’s appeal fails, the company would be left with the choice of abandoning the deal or considering alternative options, such as carving out the UK as a separate market, which is deemed impractical by industry analysts.