Boss Fight Cleared: Europe Approves Microsoft's Activision Takeover

It's another one down, two more major hurdles to jump for Microsoft in its quest to absorb video game maker Activision Blizzard, as the EU officially gave its blessing to the $68.7 billion corporate takeover on Monday. 

The assent was expected but unconfirmed for months. According to the European Commission's official reasoning in its announcement on Monday it seems that the antitrust remedies Microsoft has been proposing since February went a long way to appeasing European officials. 

While the approval hinges on Microsoft's compliance with the measures it offered up in the negotiations, "the Commission's in-depth market investigation indicated that Microsoft would not be able to harm rival consoles and rival multi-game subscription services," the EC said. 

If and when the merger goes through, Microsoft will have to offer free cloud game streaming licenses to all owners of current and future Activision Blizzard games for 10 years. A corresponding free license for cloud game streaming will be offered to game streaming providers operating in the European economic area. 

In a tweet today, Microsoft President Brad Smith said the cloud gaming deal would be extended globally and wouldn't be restricted to the EU.

The ruling said the deal applies specifically to cloud game streaming services, such as Nvidia GeForce Now, where games are bought elsewhere and streamed through the platform; but does not apply to multi-game subscription services, like XBox Live, where the streaming of a particular game is dependent on access granted by subscribing to the service, not by purchasing a particular title. 

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• UK watchdog blocks Microsoft's Activision Blizzard acquisition

Beyond simply not posing a threat, the EC said that Microsoft's concessions "represent a significant improvement for cloud gaming as compared to the current situation," so congratulations to Microsoft for getting someone to bite that hook - and hard, based on the EC's explanation of its reasoning.

While it said Microsoft won't be able to harm rival consoles and multi-game subscription services, the EC wasn't without its concerns despite its final approval of the deal. It's still worried that Microsoft could harm distribution of games via cloud gaming services and that it would strengthen its position for PC operating systems, but those weren't enough to kill the approval of the deal. 

The EC even called out Sony's public refusal to grant its blessing to the merger, which the Japanese multinational said would harm competition. The EC disagreed, saying that even if Sony were to lose access to Activision Blizzard games, this wouldn't harm its market dominance. 

"There are four Sony PlayStation consoles for every Microsoft Xbox console bought by gamers" in the European Economic Area, the Euro officials saids, adding that in contrast to Sony's claims the move would stifle access "Microsoft would have strong incentives to continue distributing Activision's games via a device as popular as Sony's PlayStation."

"Even without being able to offer this specific game [Call of Duty], Sony could leverage its size, extensive games catalogue and market position to fend off any attempt to weaken its competitive position," the EC said. 

And besides, the EC said, Call of Duty just isn't that popular in Europe "compared to other markets." 

As for access to games on multi-game subscription services, the EC concluded that Activision was unlikely to make its games available on such platforms, as it would cannibalize sales, thus "the situation for third-party providers of multi-game subscription services would not change after the acquisition of Activision by Microsoft," the commission said. 

"These commitments fully address the competition concerns identified by the Commission and represent a significant improvement for cloud game streaming compared to the current situation," the EC added. 

The Brexit bonus

The UK's Competition and Markets Authority has formally blocked Microsoft's acquisition of Activision Blizzard, and in a tweet after today's announcement from the EC it seemed little convinced in the continental bloc's acceptance of Microsoft's arguments. 

"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," the CMA tweeted. The authority said Microsoft's proposal would replace a free, open and competitive market with one subject to regulation, specifically of the games Microsoft sells, as well as the platform and condition of those sales. 

"This is one of the reasons the CMA's independent panel group rejected Microsoft's proposals and prevented this deal. While we recognise and respect that the European Commission is entitled to take a different view, the CMA stands by its decision," the CMA said. Microsoft is currently appealing the UK's decision, and is also set to go to court in the US this August to defend against similar reasoning put forth by the US Federal Trade Commission, who is also seeking to block the deal. 

Activision Blizzard CEO Bobby Kotick said in a statement that he's excited to expand Acti-Blizz's footprint in the EU. "We intend to meaningfully expand our investment and workforce throughout the EU, and we're excited for the benefits our transaction brings to players in Europe and around the world," Kotick said. 

The Warcraft studio CEO added that headcount in offices across continental Europe "given their governments' firm but pragmatic approach to gaming," in a clear shot across the bow of the UK's Sunak-proclaimed status as a hotbed of tech innovation. 

Sony, which has long resisted Microsoft's attempts to expand its gaming dominion by purchasing Activition Blizzard, could still appeal the EU's decision. It's unknown how it plans to respond - we've asked Sony for comment.

Aside from opposition suits, the deal could also still collapse if Microsoft can't get approval on appeal in the UK and/or win its court battle in the US, so this fight still might carry on longer than an Alterac Valley match in vanilla WoW. ®