In a win for Microsoft, the European Commission has approved the company’s bid to buy Activision Blizzard, saying the deal will benefit consumers.
The commission cleared the deal under the condition that current and future Activision Blizzard games be made available across competing cloud gaming services for a 10-year period.
“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,” says Margrethe Vestager, European Commissioner for Competition.
"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, Microsoft Vice Chair and President, said in a statement.
The approval comes weeks after the UK’s Competition and Markets Authority (CMA) went in the opposite direction and blocked the proposed merger, citing Microsoft’s growing influence on the cloud gaming space through Xbox Game Pass.
To assuage regulators, Microsoft has signed 10-year deals with various gaming companies promising to bring both Microsoft and Activison games to rival cloud gaming platforms. However, the UK’s CMA concluded Redmond still has the incentive to eventually make Activision games exclusive to its own cloud platforms and then raise prices for access.
Today, the CMA dug in its heels. "While we recognize and respect that the European Commission is entitled to take a different view, the CMA stands by its decision," the regulator says in a statement. Microsoft's proposals "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," the CMA says.
The European Commission agrees that the Activision tie-up could harm competition in the fledgling cloud gaming space. But it also says Microsoft’s remedy of ensuring Activision games reach rival cloud services is enough to resolve their antitrust concerns while unlocking “significant benefits for competition and consumers.”
The decision means Microsoft must provide a free license allowing consumers in the EU to “stream, via any cloud game streaming services of their choice, all current and future Activision Blizzard PC and console games” that they own. Cloud streaming providers will also receive a free license, allowing them to stream any Activision Blizzard game.
“The remedies also ensure that Activision's games available for streaming will have the same quality and content as games available for traditional download,” the commission says.
In addition, the commission finds the Microsoft-Activision deal likely wouldn't harm the console market. One concern is that Microsoft could make Activision games exclusive to Xbox, taking them away from Sony's PlayStation hardware. But even if this occurred, "Sony could leverage its size, extensive games catalogue and market position to fend off any attempt to weaken its competitive position," the commission says.
"Indeed, Microsoft would have strong incentives to continue distributing Activision's games via a device as popular as Sony's PlayStation," it adds, likely a reference to how much money Microsoft would lose by withholding games from the PS5 console.
Despite the approval, Microsoft is still fighting to clear the acquisition in the UK and the US. The company plans appeal the CMA’s decision. In the US, the Federal Trade Commission has sued to stop the proposed merger with court hearings expected to begin in August.
Another factor is that the proposed acquisition contains a contractual deadline to be completed by July 18. So if the deal fails to close by that time, Activision Blizzard could trigger a $3 billion breakup fee or renegotiate a new deadline.