The European Union Commission has officially cleared Microsoft’s billion acquisition bid of Activision Blizzard but with certain conditions.
After careful consideration and pushback from government regulators, the European Union (EU) Commission has approved Microsoft’s proposed $68.7 billion acquisition of gaming company Activision Blizzard. The announcement came this morning with a detailed press release from the EU Commission. The investigation concluded that the revised conditions, or “remedies,” for cloud gaming were revised with respect to Activision games such as Call of Duty.
The European Commission stated that Microsoft would be subject to remedies in the area of cloud gaming, as this was a major antitrust concern on creating competitive barriers for other major gaming technology players. The sum of these remedies was to allow users to stream Activision games they purchase on any cloud streaming platform.
This was a big win for Microsoft after being denied by the UK’s Competition and Markets Authority (CMA) last month. The CMA said its concerns were specific to the cloud gaming market, as Microsoft could make the Call of Duty games exclusive to its own cloud gaming platforms. Interestingly, they noted that the acquisition would not pose a risk to the console market because it would not directly eliminate competition.
So far, these two government regulators have made their decisions. The last of the three worldwide regulators investigating the Activision Blizzard deal is the U.S. Federal Trade Commission (FTC). Sony has made a few of their own testimonies on trying to block the deal. While many considerations were heard from Sony, none of them were detrimental to Microsoft.
Initially, Microsoft tried other attempts to quell the concerns of the European Commission by announcing other negotiations in their cloud gaming services. One of which was when Microsoft President Brad Smith met with EU officials in February, after which the tech giant said it would bring Xbox PC games to Nvidia’s cloud gaming service.
Nvidia had stated their opposition to the buyout bid ever since—setting Microsoft back a few steps in the compromise department. One of the biggest promises from Microsoft was that a 10-year contract deal was signed with Nintendo could be made to bring the Call of Duty games to its platform, only if the Activision Blizzard deal gets approved.
If you still do not understand the concerns surrounding cloud gaming investigations, do not worry. It can be a bit confusing. Simply put, cloud gaming allows people to stream games from servers to play their games – eliminating the need to use consoles. These games can be played on other, more convenient devices such as TVs, smartphones, and laptops. So if a user buys a game online, they could stream it through a cloud gaming service.
What makes this a competitive market space is the amount of games offered per cloud gaming platform, similar to how Netflix, Disney+ and Prime Video operate on the media streaming side of things. Essentially, the better the quality and quantity of things being streamed, the more customers will be attracted.
Thus, if Microsoft has the advantage of being able to offer Activision games exclusively on its own cloud gaming platform, it could have a significant impact on competition in the cloud gaming space. Some of the remedies offered to Microsoft by the European Commission were that consumers who have purchased or will purchase an Activision game will be able to stream those titles on any cloud gaming platform of their choice.
Another condition was that the tech giant would offer royalty-free licenses to cloud gaming platforms to stream Activision games if a consumer had purchased them. The basic concept that came out of the compromise was that gamers do not necessarily have to stream the game where they buy it. A senior European Commission official told reporters that these remedies will increase competition in the market and allow streaming platforms that did not have access to Activision games to now have them.
Margrethe Vestager, the European Commission’s executive vice president in charge of competition policy, said it was “crucial to protect competition and innovation” in the fast-growing video game industry. “Our decision is 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,” she said, ensuring the growth of competition in the gaming market.
The case with the FTC and Microsoft is still ongoing, and a senior Commission official said the European Commission has exchanged views with the FTC on several occasions – along with close cooperation regarding the investigation.
