In a significant move for the global gaming industry, Microsoft's colossal $68.7 billion acquisition of Activision Blizzard has won approval from EU regulators, even as UK regulators previously vetoed the same deal. Microsoft's ambitious plan is now back on track, thanks to the European Commission's green light, which comes with specific conditions related to cloud gaming.
EU regulators found no reason to believe that Microsoft would pull the plug on distributing Activision's games to rival platforms like Sony. They noted that even if Microsoft were to withdraw Activision's games from PlayStation, it wouldn't drastically affect competition in the console market. However, the acquisition raised concerns about potentially harming competition in the distribution of PC and console games via cloud gaming services, mirroring concerns raised by UK regulators.
To address these concerns and secure approval, Microsoft has proposed remedies that involve 10-year licensing deals offered to competitors. This includes an automatic free license to consumers in EU countries, allowing them to stream Activision Blizzard PC and console games they own via any cloud game streaming service of their choice. Cloud providers will also receive a free license to stream these games in EU markets.
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 (@BradSmi) May 15, 2023
Margrethe Vestager, the executive VP in charge of competition policy at the European Commission, sees this decision as a major step towards increasing the reach of Activision's popular games to more devices and consumers via cloud game streaming. This move is expected to enhance competition and spur growth.
However, the path to finalizing the deal is still fraught with challenges. Microsoft's appeal against the UK Competition and Markets Authority's (CMA) decision to block the deal over cloud gaming market concerns is still pending. The CMA expressed worry that Microsoft controlling popular games like Call of Duty, Overwatch, and World of Warcraft could stifle innovation and limit choice for UK gamers.
Microsoft has been actively addressing these cloud gaming concerns, signing deals with companies like Boosteroid, Ubitus, and Nvidia to enable Xbox PC games on these rival cloud gaming services. Despite these efforts, Microsoft still has to contend with regulatory scrutiny in the US and UK. While regulators in several countries have approved the deal, others are still reviewing it.
Microsoft's next big challenge is the pending lawsuit by the Federal Trade Commission to block the deal, which is still in the document discovery stage. The outcome of this case will remain unknown for several months.
While the EU approval has been welcomed by Activision Blizzard CEO Bobby Kotick, who plans to expand investment and workforce throughout the EU, the CMA stands firm on its decision. As Microsoft gears up to appeal the CMA's decision, the global gaming industry watches with bated breath.
