European Commission conditionally approves Microsoft’s acquisition of Blizzard

 

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