European Commission Says Microsoft-Activision Merger Represents Positive Development

European Commission has just issued a new statement elaborating on its decision to approve the massive Microsoft merger with Activision Blizzard, and it argues that the buyout is a positive development for the overall market. The statement dives into where the decision varied in contrast to the Competition and Markets Authority (CMA). EC argues that the end results cannot be predicted using a crystal ball, so it analyzed a variety of facets.

Occasionally, we reach decisions that are not aligned with every other jurisdiction. So I’d like to take a few moments to set out why we believe the Microsoft/Activision merger – with appropriate remedies – is not only compatible with the Single Market, but in fact represents a positive development,” says European Commission.

European Commission notes that the buyout required intensive analysis to conclude. Moreover, the market share of Microsoft in Europe is also relatively low in contrast to Sony. EC believes that Microsoft would not hurt itself by withholding the Call of Duty franchise from PlayStation consoles, which has been a significant concern of Sony in the past. “Our colleagues at the CMA agreed with us and ultimately reached the same conclusion.” 

An important finding was that the overall market share for Microsoft and Activision was generally low in Europe. It’s only when you look at specific segments like ‘shooter games’ that you get to above 20%. And for consoles, Sony sells about 4 times more PlayStations than Microsoft sells Xboxs.”

Hence, EC notes that it did not see a “vertical issue” with the Microsoft Blizzard deal. However, the European regulator also had concerns with the Cloud gaming market and focused on analyzing it thoroughly before reaching a conclusion. Cloud gaming tackles a lot of the shortcomings of traditional gaming, but it is still not a major thing in the gaming industry.

This was a common concern because, like us, the CMA focused on this market. We were worried that Microsoft would make Activision games exclusive to its own cloud gaming service. This would have restrained access to games and strengthened Window’s position as an operating system.”

However, European Commission differed with CMA on one major aspect, the remedies. EC accepted Microsoft’s offering of the 10-year free license to the users to let them stream all Activision games on the cloud for any cloud service that has the right; this solves the major impediment that hindered CMA from accepting the acquisition. As per EC, it fully cleared the concerns of the regulator, and unlike CMA, it went ahead with accepting the deal.

The Microsoft acquisition with Activision Blizzard was only accepted in Europe around ten days ago, causing a lot of commotion in the gaming sphere. While some agreed with the acceptance, others also stood against it, like the United Kingdom’s regulator CMA.

Thus, CMA issued an official response against the EU’s decision, calling it “wrong” because it didn’t consider the consequences like CMA. CMA has also blocked the deal from going through for the next ten years, but Microsoft seeks to fight that decision legally. Recently, the deal was also green-lit in China, making a total of 38 countries officially accept the merger. 

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