EU approves Microsoft-Activision deal after UK veto

Activision lawyer Image credit: Sergei Elagin via Shutterstock

The European Commission has approved Microsoft’s acquisition of Activision Blizzard just weeks after the UK competition regulator blocked the £55bn merger.

The Commission says its in-depth market investigation indicated that the deal would not harm rival Microsoft consoles and rival multi-game subscription services.

However, it acknowledged 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.

To address the competition concerns, Microsoft has committed to licensing commitments with a ten-year duration. This includes a free licence to consumers in the European Economic Area (EEA) that would allow them to stream all current and future Activision Blizzard PC and console games that they have a licence for.

Microsoft also agreed to a corresponding free licence to cloud game streaming service providers to allow EEA-based gamers to stream any Activision Blizzard’s PC and console games.

Margrethe Vestager, the executive vice-president at the European Commission who is responsible for competition policy, said: “Video games attract billions of users all over the world. In such a fast-growing and dynamic industry, it is crucial to protect competition and innovation.

“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. 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.”

CMA maintains position

The Competition and Markets Authority (CMA), the UK’s competition regulator, responded to the news via a Twitter thread by maintaining its stance on the merger.

It said: “The UK, US and European competition authorities are unanimous that this merger would harm competition in cloud gaming. The CMA concluded that cloud gaming needs to continue as a free, competitive market to drive innovation and choice in this rapidly evolving sector.

“Microsoft’s proposals, accepted by the European Commission today, would allow Microsoft to set the terms and conditions for this market for the next ten years. 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.”

The contrasting decisions put the UK and EU regulators at loggerheads after Microsoft and Activision executives warned that blocking the deal is “discouraging” UK tech innovation.

Last week, it emerged that Activision Blizzard has hired Lord David Pannick, a veteran lawyer known for defending Boris Johnson during the “party gate” scandal, to represent the video game firm during its legal action against UK regulators.