Microsoft's $69 billion Activision Blizzard deal wins EU's approval

By Samuel Stolton
 

Microsoft Corp.’s $69 billion takeover of Activision Blizzard Inc. won European Union approval, just weeks after the UK’s merger regulator delivered a shock decision to veto the gaming industry’s biggest ever deal. 
 

The European Commission said its own analysis showed the deal wouldn’t hurt competition after Microsoft vowed to let cloud rivals offer blockbuster titles such as Call of Duty on their own platforms for 10 years. The approval means the fate of the deal now hinges on the firm winning legal challenges in the US and UK — likely an uphill task.

EU antitrust chief Margrethe Vestager on Monday described the deal as “pro-competitive” and that it would “kickstart” the cloud streaming market, which represents just 1% to 3% of the entire gaming market.  

The EU’s blessing flies in the face of negative decisions by the UK’s Competition and Markets Authority, which last month showcased its post-Brexit emergence as a global watchdog, and the US Federal Trade Commission, which sought to block the deal last year. 

The EU’s Vestager said the difference in conclusions between EU and UK regulators centered on how quickly the cloud gaming market would develop in the future.

“We agree that the cloud streaming market is a promising market. We may disagree about the speed at which it will develop,” Vestager said, adding that the EU sees a longer development period for cloud gaming than the UK. 

While the EU decision offers a glimmer of hope, “it probably doesn’t change much” for Microsoft’s chances of success in legal challenges to the FTC and CMA, according to Bloomberg Intelligence analyst Jennifer Rie.

That’s “because each jurisdiction has made its decision based on the market conditions in their own region,” she said. “These conditions may differ, which can lead to a different conclusion on the antitrust impact of a deal.”

The European Commission defended its findings, saying that the commitments will empower millions of European consumers “to stream Activision’s games using any cloud gaming services” operating in the EU region. 

“The commitments will unlock significant benefits for competition and consumers, by bringing Activision’s games to new platforms, including smaller EU players, and to more devices than before,” a statement from the commission said. 

By contrast, the CMA said that the deal would reinforce Microsoft’s advantage in the cloud gaming market by giving it control over a number of leading games also including Overwatch and World of Warcraft. The UK watchdog found that without the merger Activision would be able to start providing games on cloud platforms in the future.

“Microsoft’s proposals, accepted by the European Commission today, would allow Microsoft to set the terms and conditions for this market for the next 10 years,” said Sarah Cardell, the CMA’s head, said. “While we recognize and respect that the European Commission is entitled to take a different view, the CMA stands by its decision.”