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European Commission clears merger proposal of Microsoft and Activision Blizzard

 European Commission clears merger proposal of Microsoft and Activision Blizzard

In one of the biggest merger deals, the European Commission (EC) has finally cleared the merger proposal of Microsoft and games developer Activision Blizzard for a whopping $68.7 billion, ignoring the UK Government’s decision to block the deal.

Brands and Business Magazine

After months of dilly-dallying, the European regulators said that they accepted Microsoft’s commitments that its offer to take over Activision Blizzard, the developer behind ‘Call Of Duty’ and ‘World of Warcraft’ would not reduce competition.

The EC approved the deal after accepting Microsoft’s offer to modify its licensing agreements to allow users and any cloud gaming platforms to stream its titles without paying any royalties for 10 years.

In a statement, Microsoft President Brad Smith said that the licences “will apply globally and will empower millions of consumers worldwide to play these games on any device they choose.

The EC decision is expected to help Microsoft in crossing the legal hurdles in the US where the Federal Trade Commission opposed the deal. The trial before the FTC’s in-house judge is set to begin on August 2.

The merger deal was announced more than a year ago but it has come under the scanner of regulators around the world who expressed concerns that it would give Microsoft and its Xbox console control over Activision’s hit franchises.

Even the UK’s Competition and Markets Authority (CMA) voiced fears last month about the stifling of competition in the gaming sector. However, Microsoft sought to allay such fears by striking a deal with Nintendo to licence Activision titles like ‘Call of Duty’ for 10 years and offering the same to Sony if the deal went ahead.

Protecting competition

Defending the decision, EU Competition Commissioner Margrethe Vestager said that video games attract billions of users worldwide. In such a dynamic and rapidly growing industry, it is crucial to protect competition and innovation.

“Our decision represents an important step in that direction, bringing popular Activision games to many more devices and consumers than ever before through cloud game streaming. The commitments offered by Microsoft will enable the streaming of these games in any cloud game streaming service for the first time, improving competition and opportunities for growth,” Vestager said.

Microsoft is among the top global tech companies, and manufactures Xbox. It accounts for up to 70% of cloud gaming services, where people play the game online without needing to download the game.

In his comments, Activision Blizzard CEO Bobby Kotick said that the EC conducted an extremely careful and deliberate process to gain a comprehensive understanding of the game.

“As a result, they approved our merger with Microsoft, although they demanded strict remedies to ensure strong competition in our rapidly growing industry. We intend to significantly increase our investments and headcount across the EU and are excited about the benefits our transaction brings to players in Europe and globally,” Kotick added.

UK’s CMA concerned

However, Chief Executive of CMA Sarah Cardell said that Competition authorities in the UK, the US and Europe were unanimous that this merger would harm competition in the cloud gaming market.

“They would replace a free, open, and competitive marketplace with one subject to continued regulation of the games Microsoft sells, the platforms it sells them to, and the terms of sale. That’s one of the reasons why CMA’s independent panel rejected Microsoft’s proposals and prevented this deal. While we recognise and respect that the European Commission has the right to have a different view, the CMA stands by its decision,” she added.

Brands & Business Magazine


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