EU to probe Microsoft's Activision Blizzard acquisition

The European Commission has opened an in-depth probe into Microsoft's proposed acquisition of Activision Blizzard, publisher of Call of Duty and World of Warcraft, under the EU Merger Regulation.

The EU's antitrust regulator said on Tuesday it was concerned that the proposed deal might stifle competition for the distribution of console and PC video games and for PC operating systems, including 'multi-game subscription services and/or cloud game streaming services, and for PC operating systems.'

The regulator is particularly worried that Microsoft could restrict access to Activision Blizzard's console and PC games, especially popular, high-profile AAA titles like Call of Duty.

According to the investigation's preliminary findings, Microsoft would have both the ability and economic incentive to use foreclosure tactics against rival game distributors.

Tactics could include preventing rival companies from distributing Activision Blizzard's games on consoles, or degrading the conditions under which they can use or access Activision's video games.

'When it comes to multi-game subscription services and/or cloud game streaming services in particular, the Commission is concerned that, by acquiring Activision Blizzard, Microsoft may foreclose access, to the detriment of its rival distributors of console and PC video games that offer such services, to its own PC and console video games, which are key for the provision of the nascent services of multi-game subscription and cloud game streaming,' the European Commission said.

The Commission is also looking at the PC game market, where it believes the planned purchase could affect competition.

The regulator will now conduct an in-depth probe into the transaction's effects to see whether its concerns are justified.

The Commission must decide whether to approve or deny the purchase within 90 working days (23rd March 2023).

Alternatively, the EU might agree to a conditional approval by accepting commitments from stakeholders.

Microsoft announced plans to acquire Activision Blizzard earlier this year in a $68.7 billion (£50.5 billion) all-cash deal. The acquisition is intended to help Microsoft grow its gaming business across PCs, mobile and consoles, as well as provide the building blocks for its metaverse efforts.

The Windows-maker has enormous budgets and aggressive ambitions. It owns 23 gaming studios, including Bethesda - creator of Fallout and Skyrim - and Mojang, the studio behind Minecraft.

The UK's antitrust agency is also examining the proposed acquisition deal, and Microsoft could have issues with the United States Federal Trade Commission (FTC). The FTC is in the initial stages of its investigation and a decision is not expected until late November.

Microsoft will also need the approval from Australia, New Zealand, Japan, and South Korea to complete the merger.

The software company says it will work with EU antitrust authorities to resolve legitimate market concerns.

"[PlayStation creator] Sony, as the industry leader, says it is worried about Call of Duty, but we've said we are committed to making the same game available on the same day on both Xbox and PlayStation. We want people to have more access to games, not less," a Microsoft spokesperson said.