European Commission
conditionally approves Microsoft’s acquisition of Blizzard
The European
Commission has approved the acquisition of Activision Blizzard by Microsoft,
subject to conditions.
The companies
develop and publish games for PCs, consoles, and mobile devices and distribute
games for PCs. Microsoft distributes games for consoles and offers the Xbox
console.
Following its
Phase II investigation, the Commission found that Microsoft would not be able
to harm rival consoles and rival multi-game subscription services.
The Commission
did, however, conclude that post-merger, there was a risk of foreclosure if
Microsoft made Activision's games exclusive to its own cloud game streaming
service and withheld them from rival cloud game streaming providers. This presented a further risk that Microsoft
could also strengthen the position of Windows in the market for PC operating
systems.
The
Commission's decision was perhaps predictable when viewed against a more finely
tuned appraisal of cloud gaming streaming ecosystem competition, and what it
describes as “comprehensive licensing” commitments.
It is not an
unconditional clearance. The Commission
has accepted 10-year licensing commitments to address the competition concerns
identified in the market for the distribution of PC and console games via cloud
game streaming services.
Microsoft has agreed
to grant a free license to consumers in the EEA that would allow them to
stream, via any cloud game streaming services of their choice, all current and
future Activision Blizzard PC and console games for which they have a license. A
corresponding free license will be granted to cloud game streaming service
providers to allow EEA-based gamers to stream any Activision Blizzard's PC and
console games.
The clearance
under the EU merger regulation is in stark contrast to the CMA’s outright prohibition
of the merger in April. Meanwhile the
FTC has a pending challenge to the merger in the USA.
While the CMA
and the European Commission apply very similar analytical frameworks, their
views on the impacts on their own markets are coloured by the results of the
market test and impacts on competition they consider to be important. The Commission found that even without this
transaction, Activision would not have made its games available for multi-game
subscription services.
The
Commission’s decision is unlikely to stop the CMA’s current hawkish enforcement
stance in merger control which shows it is prepared to tread its own path.
Whether the UK
decision will scupper the whole deal remains to be seen as an appeal is
understood to be underway. However, the parties and their advisers will no
doubt be taking a long hard look at the global implications of different
approaches of the merger authorities to a deal with global and complex impacts.
https://ec.europa.eu/commission/presscorner/detail/en/ip_23_2705
