Microsoft's Activision Blizzard deal wins approval from EU, CMA responds

Since last year, Microsoft has had its hands full, trying to convince regulators to accept its purchase of Activision Blizzard. On the heels of the UK’s Competition and Markets Authority’s (CMA) rejection, Microsoft just got a much-needed win.

Today, the EU’s regulatory body, the European Commission (EC), announced that it has approved Microsoft’s bid to acquire Activision Blizzard. According to the EC, this approval is conditional on “full compliance with the commitments offered by Microsoft.”

These commitments involve 10-year promises Microsoft made for its licenses. Specifically, Microsoft agreed to the following:

• A free license to consumers in the European Economic Area (EEA) that would allow them to stream, via any cloud game streaming services of their choice. This includes all current and future Activision Blizzard PC and console games for which they have a license.
• A corresponding free license to cloud game streaming service providers to allow EEA-based gamers to stream any Activision Blizzard’s PC and console games.

The EC claims it has reached this decision after an in-depth investigation found that Microsoft “would not harm rival consoles and rival multi-game subscription services.” However, the EC also expressed concerns that the company could harm competition in “the distribution of games via cloud game streaming services.” Another concern is that it could also use this deal as a way to strengthen its position in the PC operating system market.

It was only weeks ago that the CMA decided to reject Microsoft’s merger. On the same day of this announcement, the CMA released a response to the ruling on Twitter.

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 10 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.

In short, the CMA holds similar concerns about the acquisition that the EC addressed. However, the CMA reached a different conclusion and felt the risk was too great to approve.

While the EC’s ruling is a big win for Microsoft, the fight is far from over. It still has until May 24 to appeal the CMA’s decision. Microsoft will also have to contend with the US Federal Trade Commission’s case against the deal.