EU Approves Microsoft Takeover of Activision Blizzard

With this decision, the European Commission is in opposition to the opinion of the competition authorities of the United Kingdom and the United States.

While the United Kingdom’s competition watchdog (CMA) has vetoed the takeover of Activision Blizzard (Call of Duty) by Microsoft (Xbox), the European Commission, on Monday, May 15, approved the operation at $69 billion.

A news that sows even more trouble on the outcome of this merger. Indeed, on the same day, the CMA, in addition to its takeover veto, drove the point home a little further by requiring Microsoft, Activision Blizzard and their subsidiaries to obtain its “prior written consent” if they wanted to acquire shares between themselves.

The European Union is thus in total contradiction with the opinion of the British competition authorities, then of the American policeman (FTC) who launched proceedings last December in order to block the operation. The American and British entities consider that the agreement harms innovation and competition, in particular by strengthening the dominant position of the Redmond firm in the cloud gaming market.

The conclusions of the investigation

In its preliminary investigation, the Commission concluded that Microsoft would have no reason to refuse to distribute Activision’s games to Sony (PlayStation), given its popularity. Remember that in the European Union, 4 out of 5 consoles sold are PlayStations. “Even if Microsoft decided to withdraw Activision’s games from the PlayStation, it would not significantly harm competition in the console market”, ventures the Commission. According to her, even without being able to distribute the famous Call of Duty license, Sony would be able to take advantage of its size and an already extensive catalog of games.

In the cloud gaming segment, the European executive points out that, although promising, this market is still underdeveloped. The popularity of Activision games may well popularize this practice by transforming “the way many gamers play video games. The Commission recognizes, however, that making Activision games exclusive to Microsoft’s Cloud gaming streaming service (Game Pass Ultimate) would harm competition. In addition to strengthening the dominant position of Windows on PC operating systems.

Microsoft has made commitments over a period of 10 years which have obviously been enough to allay the concerns of the EU. The Redmond firm will thus grant free licenses to European cloud providers on current and future Activision Blizzard games. So that consumers can enjoy it on any device or operating system.

An operation still on hold

The UK’s competition watchdog criticized the European Commission’s decision. “Microsoft’s proposals, accepted today by the European Commission, would allow Microsoft to set the terms of this deal for the next ten years,” said Sarah Cardell, CMA’s chief executive. The competition authority fears that Microsoft is replacing an open and competitive free market with a market “subject to permanent regulation of the games sold by Microsoft, the platforms on which it sells them and the conditions of sale”.

And now ? The case is far from being in the bag. Microsoft has appealed the CMA’s decision and has yet to defend its case before the UK’s Competition Appeal Tribunal (CAT). “If Microsoft does not win the appeal before the CAT, it will not be able to proceed with the acquisition even if the European Commission approves it”, estimates Anne Witt, specialist in competition law at Edhec, questioned by l AFP. “Unless, of course, Microsoft decides to exit the UK market, but that seems unlikely. she adds. What about the FTC in the United States? A trial against the firm is due to begin this summer.

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