EU approves Microsoft-Activision deal

Denies CMA's block

After encountering a regulatory roadblock in the UK, Microsoft's planned acquisition of Activision Blizzard for $75 billion has been approved by the European Union's antitrust watchdog.

The approval is, however, conditional on Microsoft fully adhering to its previous commitments, the European Commission said.

"The commitments fully address the competition concerns identified by the Commission and represent a significant improvement for cloud gaming as compared to the current situation," the regulator added.

Following an investigation, the Commission concluded that Microsoft "lacks any motivation" to deny Activision's games being distributed by Sony, i.e. on the PlayStation console.

The regulator also determined that, even in a scenario where Microsoft chose to remove Activision's games from the PlayStation, it would not significantly impact console market competition.

The findings do, however, indicate that the acquisition would affect competition in the distribution of PC and console games through cloud gaming services.

The European Commission did identify one potential way competition could be compromised: if Microsoft were to make Activision games exclusive to its own platform. However, the Commission acknowledged that Microsoft has provided remedies to address these concerns and alleviate potential competition issues.

Under Microsoft's proposed remedies, consumers who have purchased or plan to purchase (quite how this is determined is unclear) an Activision game will have the ability to stream these titles on any cloud gaming platform of their preference.

Microsoft will also grant royalty-free licenses to cloud gaming platforms, allowing them to stream Activision games if the consumer has legitimately acquired one. This means gamers aren't limited to streaming games solely on the platform where they made the purchase.

Microsoft has recently entered signed licensing agreements with entities including Nvidia in the USA, Nintendo and Ubitus in Japan and Boosteroid in Ukraine. If the acquisition does go through, those companies will be able to feature Activision games on their respective platforms.

"The European Commission has required Microsoft to license popular Activision Blizzard games automatically to competing cloud gaming services," said Microsoft President Brad Smith. "This will apply globally and will empower millions of consumers worldwide to play these games on any device they choose."

EU is only one of three regulators to be satisfied

Regulators in the UK, EU and USA all need to approve the deal for it to go through.

The European Commission is the first to give approval. The UK's Competition and Markets Authority (CMA) blocked the deal last month, citing concerns about adverse effects on cloud gaming competition.

The US Federal Trade Commission filed a lawsuit in December, also seeking to block the deal. A judge's decision is not expected until later in the year.

Last week, the CMA went a step further and blocked Activision-Blizzard and Microsoft from acquiring any stake or interest in each other.

In response, Microsoft has said it will appeal the CMA's decision to the Competition Appeal Tribunal. However, a ruling is likely to take several months to be reached.

Commenting on EU's decision, Gareth Mills, Partner at law firm, Charles Russell Speechlys said: "The divergence of the EU Antitrust regulator's approval for the Microsoft / Activision acquisition from the decision of the CMA some three weeks ago may on the face of it seem surprising.

"However, it is worth noting that the EU's approval is based on Microsoft agreeing to enter into licensing deals with rivals and with other behavioural remedies for future conduct providing regulatory safeguards. The picture is therefore more complex than a binary 'approval/rejection' of the respective regulators that supporters of the deal may seek to imply.

"The saga is unlikely to come to an end anytime soon, with a legal complaint refiled last week in the Californian courts by gamers seeking an injunction, as well as Microsoft's heralded appeal of the CMA's decision and the US Federal Trade Commission's case against the acquisition also still pending."