UPDATE: The article has been updated to include information from Vice Chair of Microsoft’s Brad Smith, pertaining to the automatic licensing of popular Activision games to cloud competitors on a global scale.
What You Need to Know
- In case you’ve been living under a rock, Microsoft announced back in 2022 their intent to acquire Activision-Blizzard.
- The European Commission has approved Microsoft’s pending Activision-Blizzard acquisition.
- The EC has found that Microsoft’s proposed 10-year licensing deals are sufficient remedies for concerns about the cloud gaming market.
The European Commission has approved Microsoft’s pending acquisition of Activision-Blizzard nearly a year and a half after the deal was proposed. The EC provided a lengthy analysis that you can find right here, but there are a few key points provided that explain their rationale for approval.
- The Commission’s in-depth market investigation indicated that Microsoft would not be able to harm rival consoles and rival multi-game subscription services. At the same time, it confirmed that Microsoft could harm competition in the distribution of games via cloud game streaming services and that its position in the market for PC operating systems would be strengthened.
- Microsoft would have no incentive to refuse to distribute Activision’s games to Sony, which is the leading distributor of console games worldwide, including in the European Economic Area (‘EEA’) where there are four Sony PlayStation consoles for every Microsoft Xbox console bought by gamers. Indeed, Microsoft would have strong incentives to continue distributing Activision’s games via a device as popular as Sony’s PlayStation.
‘To address the competition concerns identified by the Commission in the market for the distribution of PC and console games via cloud game streaming services, Microsoft offered the following comprehensive licensing commitments, with a 10-year duration:”
- A free license to consumers in the EEA that would allow them to stream, via any cloud game streaming services of their choice, all current and future Activision Blizzard PC and console games for which they have a license.
- A corresponding free license to cloud game streaming service providers to allow EEA-based gamers to stream any Activision Blizzard’s PC and console games.
“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. They will empower millions of EEA consumers to stream Activision’s games using any cloud gaming services operating in the EEA, provided they are purchased in an online store or included in an active multi-game subscription in the EEA. In addition, the availability of Activision’s popular games for streaming via all cloud game streaming services will boost the development of this dynamic technology in the EEA. Ultimately, 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.”
Video games attract billions of users all over the world. In such a fast-growing and dynamic industry, it is crucial to protect competition and innovation. Our decision represents 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. The commitments offered by Microsoft will enable for the first time the streaming of such games in any cloud game streaming services, enhancing competition and opportunities for growth.Margrethe Vestager, Executive Vice-President in charge of competition policy – 14/05/2023
The European Commission has also required to license popular ATVI games automatically to cloud competitors. This will apply globally, meaning that this is not just a policy that can only be enforced in the European nations. Per Vice Chair and President of MSFT Brad Smith:
While the approval of the acquisition by the European Commission represents a major step towards the deals completion, Microsoft still faces an uphill battle after the CMA recently decided to block the deal on the basis of the acquisition harming the nascent cloud gaming market.
It will likely be several more months of legal back and forth before we have a better idea of the likelihood of the deals completion or failure.