Published - May 16th, 2023 @ 14:30 PM (GMT+2)
E.U. regulators approve Microsoft’s $69 billion purchase of Activision.
Monday saw the troubled $69 billion purchase proposal of video game giant Activision Blizzard by Microsoft gain momentum as the transaction secured approval from regulators in the European Union. This would be the most significant consumer tech deal in the last two decades if it goes through.
The approval came as Microsoft, the company behind the Xbox console, agreed to certain conditions. These ensured that titles developed by Activision, including the immensely popular Call of Duty, would continue to be available to competitor companies offering new online gaming services.
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U.S. & U.K. regulators oppose the deal due to competition concerns.
However, the mega-acquisition, seen as a litmus test for global regulators' acceptance of tech mergers in light of concerns about the industry's influence, still has a steep path ahead. Regulators in the United States and the United Kingdom have attempted to block the deal in recent months, positing that merging the Xbox creator with the company responsible for the Call of Duty series would stifle competition. Microsoft is contesting these actions.
The deal has highlighted differences among regulators regarding the approach to curtail the power of top technology firms. Critics of the acquisition have focused on cloud gaming, an emerging technology that enables game streaming on various devices, potentially making hardware like consoles redundant. Regulators in the U.S. and the U.K. have argued that Microsoft's acquisition of Activision would stifle this nascent gaming industry segment before it has a chance to flourish.
The European Commission, representing the 27-nation bloc, approved after Microsoft committed to a 10-year guarantee that gamers would have access to Activision titles on cloud gaming services being developed by other firms, such as Nvidia.
Microsoft's concessions include a 10-year guarantee for Activision games on other cloud gaming services.
After negotiating the concessions with Microsoft, E.U. officials concluded that the deal could proceed, especially considering the small size of the cloud gaming market. They noted that many Activision titles not currently available on more minor cloud gaming services would now be accessible, offering a consumer boost for the new technology.
The E.U. regulator stated, "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."
Microsoft stated that the concessions would benefit consumers. Brad Smith, the president of Microsoft, said, "The European Commission has required Microsoft to license popular Activision Blizzard games automatically to competing cloud gaming services. This will apply globally and empower millions of consumers worldwide to play these games on any device they choose."
The struggle to achieve a global consensus on regulating the evolving tech industry is evident in the deal. While lawmakers on both sides of the Atlantic have voiced worries about the burgeoning power of the tech sector, disagreements persist regarding when and how to step in.
The approval from the E.U. on Monday is an unusual instance where European regulators appear more lenient than their American counterparts. For years, European antitrust regulators have taken a tough stance against big tech companies like Google, levying billions of dollars in fines and demanding changes to certain business practices. A new E.U. law to be implemented by next year will introduce further competition oversight of the largest tech companies.
The Federal Trade Commission (F.T.C.) in the U.S. sued to prevent Microsoft's purchase of Activision in December, arguing that the deal would harm consumers and divert gamers from competitors. British regulators echoed these concerns last month, dismissing the acquisition due to fears about harming the cloud gaming market.
The fate of the deal depends on legal proceedings in the U.S. & U.K.
The ultimate fate of the deal will primarily depend on the legal proceedings in the U.S. and the U.K. Both companies must demonstrate that the transaction would not impede competition, primarily if Microsoft would ensure access to Activision titles. A defeat in either country could doom the deal due to the global and interconnected nature of the video game industry and its technology.
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