EC approves Microsoft's acquisition of Activision Blizzard

The European Commission has granted approval, subject to certain commitments, for Microsoft's proposed acquisition of Activision Blizzard under the EU Merger Regulation. The approval is contingent upon Microsoft's full compliance with the commitments offered, which effectively address the competition concerns identified by the Commission. This acquisition represents a significant advancement for cloud gaming compared to the current landscape.
The decision follows a thorough investigation conducted by the European Commission into the potential acquisition. The Commission based its decision on solid evidence and extensive input from competitors, customers, game developers, distributors, and cloud game streaming platforms within the European Economic Area (EEA).
The investigation revealed that both Microsoft and Activision Blizzard are involved in game development and publishing for PCs, consoles, and mobile devices, as well as game distribution for PCs. Microsoft, in addition to game distribution, also offers the widely popular Xbox console and a range of products and services, including the PC operating system "Windows." Activision Blizzard's renowned game portfolio includes titles such as Call of Duty, World of Warcraft, Overwatch, and Diablo.
During the preliminary investigation, the Commission determined that Microsoft could potentially harm competition in the distribution of console and PC video games, multi-game subscription services, and cloud game streaming services, as well as in the supply of PC operating systems.
After conducting an in-depth market investigation, the Commission concluded that Microsoft would not pose a threat to rival consoles and multi-game subscription services. However, it found that Microsoft could impede competition in the distribution of games through cloud game streaming services and strengthen its position in the market for PC operating systems.
The Commission's key findings include:
• Microsoft would have no incentive to withhold the distribution of Activision's games from Sony, the leading global distributor of console games, including within the EEA, where Sony PlayStation consoles greatly outnumber Microsoft Xbox consoles. Microsoft has strong motivations to continue distributing Activision's games through popular platforms such as Sony's PlayStation.
• Even if Microsoft were to withdraw Activision's games from the PlayStation, it would not significantly impact competition in the console market. Sony, leveraging its size, extensive game catalog, and market position, would be capable of safeguarding its competitive standing.
• Activision would not have made its games available for multi-game subscription services even without the proposed acquisition, as it could cannibalize individual game sales. Thus, the transaction would not alter the situation for third-party providers of multi-game subscription services.
• The acquisition would harm competition in the distribution of PC and console games through cloud game streaming services, a transformative market segment in gaming. The Commission found that Activision's popular games could foster the growth of cloud game streaming. However, if Microsoft were to make Activision's games exclusive to its own cloud game streaming service, Game Pass Ultimate, and exclude rival providers, competition in the distribution of games through cloud streaming would be diminished.
• Making Activision's games exclusive to its cloud game streaming service could also bolster Windows' position in the PC operating systems market. This scenario could arise if Microsoft obstructed or impaired the streaming of Activision's games on PCs utilizing operating systems other than Windows.