As expected, the European Commission today approved Microsoft’s proposed acquisition of Activision Blizzard. However, the approval is conditional on full compliance with the commitments offered by Microsoft. The commission believes that the commitments offered by Microsoft fully address the competition concerns identified by them and represent a significant improvement for cloud gaming as compared to the current situation.
Through in-depth investigation over the past several months, the Commission found the following:
- Microsoft would have no incentive to refuse to distribute Activision’s games to Sony, which is the leading distributor of console games worldwide, including in the European Economic Area (‘EEA’) where there are four Sony PlayStation consoles for every Microsoft Xbox console bought by gamers. Indeed, Microsoft would have strong incentives to continue distributing Activision’s games via a device as popular as Sony’s PlayStation.
- Even if Microsoft did decide to withdraw Activision’s games from the PlayStation, this would not significantly harm competition in the consoles market. Even if Call of Duty is largely played on console, it is less popular in the EEA than in other regions of the world, and is less popular in the EEA within its genre compared to other markets. Therefore, even without being able to offer this specific game, Sony could leverage its size, extensive games catalogue and market position to fend off any attempt to weaken its competitive position.
- Even without this transaction, Activision would not have made its games available for multi-game subscription services, as this would cannibalize sales of individual games. Therefore, the situation for third-party providers of multi-game subscription services would not change after the acquisition of Activision by Microsoft.
- The acquisition would harm competition in the distribution of PC and console games via cloud game streaming services, an innovative market segment that could transform the way many gamers play video games. Despite its potential, cloud game streaming is very limited today. The Commission found that the popularity of Activision’s games could promote its growth. Instead, if Microsoft made Activision’s games exclusive to its own cloud game streaming service, Game Pass Ultimate, and withheld them from rival cloud game streaming providers, it would reduce competition in the distribution of games via cloud game streaming.
- If Microsoft made Activision’s games exclusive to its own cloud game streaming service, Microsoft could also strengthen the position of Windows in the market for PC operating systems. This could be the case, should Microsoft hinder or degrade the streaming of Activision’s games on PCs using operating systems other than Windows.
Microsoft offered the following commitments:
- A free license to consumers in the EEA 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 for which they have a license.
- A corresponding free license to cloud game streaming service providers to allow EEA-based gamers to stream any Activision Blizzard’s PC and console games.
Video games attract billions of users all over the world. In such a fast-growing and dynamic industry, it is crucial to protect competition and innovation. 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. 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.
The proposed acquisition of Activision Blizzard, one of the largest gaming companies globally, known for its popular titles like Call of Duty, Overwatch, and World of Warcraft, has been a topic of contention since it was announced. While Japan approved the takeover in March, the U.S. Federal Trade Commission is also seeking to block it.
The UK’s CMA rejected the deal last month after an extensive investigation. The authority voiced concerns that the acquisition could give Microsoft an unfair advantage in the rapidly growing cloud gaming market by making Activision’s games exclusive to its service. The CMA underscored that cloud gaming needs a free, competitive market to drive innovation and choice and that this is best achieved by allowing the current competitive dynamics in cloud gaming to continue to operate without regulatory intervention.