EU Approves Microsoft's Activision Blizzard Acquisition - News
by William D'Angelo , posted on 15 May 2023 / 4,837 Views
The European Union regulator, the European Commission, has approved Microsoft's $67.8 billion acquisition of Activision Blizzard. The deal was passed due to the deals signed by Microsoft in recent months related to cloud gaming.
The regulator stated Microsoft "would have no incentive to refuse to distribute Activision's games to Sony" and even if they did it "would not significantly harm competition in the consoles market."
The European Commission did conclude the deal could harm competition in the cloud gaming market. The regulator did identify remedies from Microsoft as it signed multiple 10-year deals with cloud gaming services to bring Xbox games on PC to Nvidia's GeForce Now, Boosteroid, Ubitus, and Nware.
"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," reads the report from the regulator.
"They will empower millions of EEA (European Economic Area) 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."
The regulator says the cloud streaming providers in its response "gave positive feedback and showed interest in the licenses" and some of them have "already entered into bilateral agreements with Microsoft based on the proposed licenses to stream Activision's games, once the transaction is completed."
The regulator "concluded that the proposed acquisition, as modified by the commitments, would no longer raise competition concerns and would ultimately unlock significant benefits for competition and consumers. The Commission's decision is conditional upon full compliance with the commitments. Under supervision of the Commission, an independent trustee will be in charge of monitoring their implementation."
"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," said the European Commission Executive Vice President Margrethe Vestager, who is in charge of competition policy at the regulator.
"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."
Activision Blizzard CEO Bobby Kotick in an email sent to employees stated, "the European Commission (EC), one of the world’s most thorough and respected regulators, approved our merger with Microsoft. This decision underscores the benefits our transaction provides to players and to competition.
"Careful regulators in numerous other countries have already approved the merger. By joining them today, the EC has once again demonstrated their rigorous, fair and sensible approach with the creation of appropriate regulatory guardrails that ensure competition in important growth industries.
"Microsoft has agreed to conditions as part of the EC’s approval, including licenses for legitimate cloud gaming providers to stream Activision Blizzard games and enforcement mechanisms to ensure these regulatory commitments are upheld.
"This important step provides a proper roadmap for regulators around the world to consider when determining how best to encourage and promote competition in the gaming industry.
"There is still work to be accomplished before our merger can be finalized but it is encouraging that regulators like the European Commission understand and appreciate the considerable growth opportunities provided by our industry."
Microsoft Vice Chair and President Brad Smith in a statement via Twitter said, "The European Commission has required Microsoft to license popular Activision Blizzard games automatically to competing cloud gaming services. This will apply globally and will empower millions of consumers worldwide to play these games on any device they choose."
The European Commission has required Microsoft to license popular Activision Blizzard games automatically to competing cloud gaming services. This will apply globally and will empower millions of consumers worldwide to play these games on any device they choose.
— Brad Smith (@BradSmi) May 15, 2023
Activision Blizzard EVP Corporate Affairs and CCO Lulu Cheng Meservey in a statement via Twitter said, "Activision Blizzard plans to meaningfully expand our investment and workforce throughout the EU, and we’re excited for the benefits our deal with Microsoft offers players in Europe and elsewhere. Today the European Commission approved our merger with Microsoft (subject to strict remedies) to ensure robust competition continues in our rapidly growing industry.
"Our talented teams in Sweden, Spain, Germany, Romania, Poland, and other European countries have the skills, ambition, and government support needed to compete globally. And with the EU’s firm yet pragmatic, unbiased, and fact-driven approach to regulation, we expect these European teams to continue delivering growth and innovation going forward."
Activision Blizzard plans to meaningfully expand our investment and workforce throughout the EU, and we’re excited for the benefits our deal with Microsoft offers players in Europe and elsewhere.
— Lulu Cheng Meservey (@lulumeservey) May 15, 2023
The European Union regulator is the eighth confirmed place to have been confirmed to have approved the deal, following Ukraine, South Africa, Japan, Chile, Brazil, Saudi Arabia, and Serbia.
Microsoft and Activision Blizzard are still facing an uphill battle as UK regulator, Competition and Markets Authority (CMA), last month decided to block the deal over concerns with cloud gaming.
Microsoft does plan on appealing the decision with the the Competition Appeal Tribunal in the UK. The company has hired lawyer Daniel Beard KC, who has been able to defeat the EU regulator on multiple occasions.
Update: Article updated with responses from Activision Blizzard CEO Bobby Kotick and Activision Blizzard EVP Corporate Affairs and CCO Lulu Cheng Meservey.
A life-long and avid gamer, William D'Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012 and taking over the hardware estimates in 2017. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel. You can contact the author on Twitter @TrunksWD.
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MS is also not allowed to buy a stake in ABK. Like a 2% minority stake, or vice versa.
It basically means that Microsoft can't go around the CMA ruling by purchasing stake in Activision.
Thanks.
This is going to be going on for at least another year or more. That's if they can get fast tracked with CAT which they don't even fit the criteria for that.
What happens if CMA is the only one rejecting this deal?
Was curious about that as well. I think in some instances they can essentially separate the business in that country from the rest of the deal so it becomes a separate entity but I don’t think that’s a likely or practical outcome here.
Would have a bit of blowback if only the UK reject it and that ends up scuppering the whole deal.
My understanding is they have 3 options:
1 . Microsoft pulls their gaming business out of the UK entirely.
2 . Microsoft creates a UK only spinoff ABK that operates independently of Microsoft in the UK only and Xbox is not allowed to make any ABK games exclusive to Xbox or Xbox Cloud Gaming in the UK for life basically.
3 . Microsoft backs out of the acquisition completely, and loses what is basically a $2b deposit.
However, there is still a chance that CAT rejects CMA's cloud arguments and sends it back to CMA while telling them they can't block the deal on cloud grounds, meaning that CMA will be forced to either approve it, or come up with a different reason for blocking it that will satisfy CAT. I believe I also heard that the UK Prime Minister said he is looking into weakening the CMA's powers in the wake of the backlash over this decision by them.
Second option seems like a decent compromise for MS. Is it realistic?
A spin-off of their cloud business maybe, but not if everything.
Its the most realistic Option/Compromise because MS are not going to back out of this deal simply because one regulator is blocking it on the basis of cloud gaming.
yes!!!! just a bit closer. though i dont think diablo will be ready for gamepass day one though.
I like how the CMA felt compelled to tweet in response with a “oh yeah? Well fuck you, we left your ass EU” like they’re a bunch of teenagers begging for attention. That’s when you know a governmental body has too much authority. The King of England couldn’t even get on to the CMA they have so much power lol.
One step MS needed, two to go.
Is that a Mario screenshot in the article picture from EU regulators? Lol. So Microsoft and Activision will be able to sell Mario games haha.
And many thought the article stating the rumor would be false.
Well to their defense, it was the same for the CMA :) All rumors pointed out for the deal to NOT be blocked :) Was not crazy to think it may be the same for the EU!
Its why you should never have your hopes up on an assumption
Well then, UK regulator.
As long as this doesn't interfere with starfield launching in October.
Of course they did, Because they made mostly factual decisions. And the only differentiator between the two outcomes of ABK approval from the rest of the world, and non-approval from the two most corrupt financial….countries is, well, corruption.
CMA refused to admit cloud was an insignificant part of gaming overall as part of a larger decision, refused to admit cloud gaming already has Competition in the UK which already exists with Luna, refuses to admit how small cloud gaming is and likely to be for a long time. Refuses any opportunity for Sony to react with cloud partners…..and much more. CMA is CORRUPT. Unlimited fullstops……..
OH, and the cloud gaming market is only 1% in all of the EU. To block the rest of the deal based on that is pure corruption..
Now to see if UK will fold.
Last time they decided to leave EU instead
I know, but they still have a say in the deal.
the EU usually follows what the US decisions are.
So Patcher failed.
CoD day one on PS Plus Premium then
Players still need to buy it or Sony to make a deal to give it for "free".; if they want to do that,
The license is free for Sony to be able to stream it on their cloud server... Not for all players to use it for free. Same goes for all Blizzard's title.
This was the main point of the CMA, that providers had to pay for the license to "stream" it and those were redacted in the CMA decisions.
What
Not sure what your "what" means. I just explained to you, with clear words, what I meant (cause I think you are mixing up the license for Sony to be able to stream the game versus the cost of the game itself which is not free and will never).
Can you ask a full question or make a full sentence?
But just to give more insight, if Sony wants to put COD on their cloud, they have 2 options:
Without the EU remedies:
-
Offer it for free for all premium members (but they have to first pay for the license to put the game on their cloud and then pay Activision monthly fees? or whatever the duration of the deal for unlimited use for all those members)
-
Offer it for streaming, but members still need to buy it (I'm, not even sure if Sony offers that anyway). And in that case, Sony will need to pay for the "stream" licenses (that Activision currently does not even offer)
With EU remedies
-
Offer it for free for all premium members, then they will just need a deal for the duration of the contract to put the game out there free for all premium members. No streaming license fees.
- Offer it for streaming only, same here. Play Station users will just need to buy the game and the streaming will not require any additional fees from Sony to Activision.
It was not a question
Ms has offered it but Sony said no cause they only care to block this acquisitions
From the looks of the CMA response to this on Twitter, this outcome means very little in the end.
It means very little for the CMA (but who expected otherwise). It means a lot for the deal... :)
