EU Commissions Approves Microsoft’s Activision Blizzard Deal, U.K. CMA Reaffirms Its Standing

Current events concerning Xbox is the consensus of its next major acquisition: Activision Blizzard. While the firm receives approval from different markets & governments, Microsoft still faces scrutiny elsewhere. For one, the U.S. Federal Trade Commission has filed a lawsuit against the Xbox firm on the deal. But that is not the only adversary it is facing recently.

Elsewhere across the Atlantic, the U.K. Competition and Markets Authority (CMA) officially blocked the deal from proceeding. The decision was based on Microsoft’s grasp on cloud streaming to limit reach for users. Additionally, the regulator also applied additional barriers which further walled Microsoft’s efforts more recently.

In a new announcement from the EU Commission, the group has decided in favor of the Activision Blizzard acquisition. After a long investigation in the matter, it decided Microsoft’s motive to be in favor for the consumer applying its services to a wide range of platforms beyond just Xbox, it released on Tuesday.

Today’s decision follows an in-depth investigation of the proposed acquisition of Activision by Microsoft. Both companies develop and publish games for PCs, consoles, and mobile devices and distribute games for PCs. Microsoft also distributes games for consoles and offers the Xbox console along with a wide range of products and services, including the PC operating system “Windows”. Activision’s games portfolio includes famous franchises such as Call of Duty, World of Warcraft, Overwatch and Diablo.

The Commission’s preliminary investigation found that Microsoft could harm competition (i) in the distribution of console and PC video games, including multi-game subscription services and cloud game streaming services; and (ii) in the supply of PC operating systems.

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,” the document reads.

The EU Commission also believes that the decision, even if hypothetical, to pull titles from PlayStation would not be harmful to the greater industry in long-term. “Even if Microsoft did decide to withdraw Activision’s games from the PlayStation, this would not significantly harm competition in the consoles market. Even if Call of Duty is largely played on console, it is less popular in the EEA than in other regions of the world, and is less popular in the EEA within its genre compared to other markets.

“Therefore, even without being able to offer this specific game, Sony could leverage its size, extensive games catalogue and market position to fend off any attempt to weaken its competitive position.” It also goes on to believe more harm would be done if the deal did not progress stating that Activision Blizzard games will not be handed to third-party platforms. In response, the CMA did share a response to the EU Commission’s announcement via Twitter.

“They would replace a free, open and competitive market with one subject to ongoing regulation of the games Microsoft sells, the platforms to which it sells them, and the conditions of sale.  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.”

Do you favor the EU Commission or the CMA decision for Microsoft’s deal on Activision Blizzard?

Source: EU Commission