EU approves Microsoft’s acquisition of Activision Blizzard with conditions

Microsoft’s proposed acquisition of Activision Blizzard has been approved by the European Commission, according to a press release issued on May 15. The decision came after an investigation found that Microsoft’s commitments to addressing competition concerns were sufficient and that the merger would result in a significant improvement for cloud gaming compared to the current situation.

The proposed acquisition has faced scrutiny worldwide due to the potential for creating a monopoly within the industry. In late April, the UK government’s Competitions and Markets Authority (CMA) blocked the merger, citing concerns over the impact on competition in the gaming industry. However, the European Commission found that the merger would not harm rival consoles and rival multi-game subscription services, but could harm competition in the distribution of games via cloud game streaming services.

To address this concern, the European Commission outlined several “remedies” to protect the European cloud gaming industry from a potential Microsoft monopoly. These included providing free licenses to consumers in the European Economic Area to stream all current and future Activision Blizzard PC and console games via any cloud game streaming services of their choice. Microsoft must also provide a corresponding free license to cloud game streaming providers to allow EEA-based gamers to stream any of Activision Blizzard’s PC or console games. These remedies will be binding for 10 years.

The European Commission’s constraints are singularly focused on cloud gaming, as the CMA found that Microsoft occupies 60-70% of the cloud gaming market share. These measures serve to protect consumer interests across Europe, and could potentially serve as a model for Microsoft to approach the UK government in an attempt to reverse the CMA’s ruling.

However, the Federal Trade Commission in the United States still has an ongoing suit against the merger, which both companies will have to navigate in the coming months. While the European Commission’s decision is a win for Microsoft, the tech giant has yet to win the war. Activision Blizzard has pledged to work aggressively with Microsoft to reverse the CMA’s decision on appeal, and the outcome of the US suit remains uncertain.