Microsoft wins EU antitrust nod for $69 bn Activision deal

Microsoft has won EU antitrust approval for its $69 billion deal to buy gaming major Activision, after regulators said its offer of free 10-year licensing deals to gamers and cloud streaming rivals addressed their concerns.
Microsoft to acquire Activision BlizzardThe European Commission said the biggest-ever deal in the gaming industry was pro-competitive due to Microsoft’s licensing deals. Britain has already blocked the deal.

Licenses are practical and effective, European Union antitrust chief Margrethe Vestager told reporters.

“Actually they significantly improve the condition for cloud game streaming compared to the present situation, which is why we actually consider them pro-competitive,” Margrethe Vestager said.

The EU watchdog said Microsoft has offered 10-year free licensing deals to European consumers and cloud game streaming services for Activision’s PC and console games.

The Commission’s investigation indicated that Microsoft would not be able to harm rival consoles and rival multi-game subscription services. It confirmed that Microsoft could harm competition in the distribution of games via cloud game streaming services and that its position in the market for PC operating systems would be strengthened.

In particular, the Commission found that:

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.

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