European Commission approves Microsoft-Activision Blizzard deal

The European Commission has given final approval to Microsoft's acquisition of Activision Blizzard after the Xbox maker made 10-year commitments to address regulator concerns in the growing cloud streaming market.

While the commission's preliminary investigation identified concerns around the deal having negative impacts in the console, PC, and multi-game subscription markets, after an in-depth look into the issues, it ultimately determined some of those were non-issues.

It agreed that Microsoft would have no incentive to withhold games from PlayStation consoles in Europe, as the European Economic Area (EEA) has four PlayStation systems for every Xbox system, and the Call of Duty franchise is not as big in Europe as in other markets.

As for competing subscription services, the commission decided that they would not have put its games into them for fear of cannibalizing sales, "Therefore, the situation for third-party providers of multi-game subscription services would not change after the acquisition of Activision by Microsoft."

However, the commission did determine that the deal would harm competition in cloud gaming services, and could further strengthen Microsoft's hold on PC operating systems with Windows.

To address those concerns, Microsoft offered to give consumers in the EEA a free license to stream all current and future Activision Blizzard PC and console games for which they have a license, and to stream them through the cloud streaming service of their choice.

Along with that, Microsoft also offered a free license to cloud streaming services to allow players in the EEA to stream any of Activision Blizzard's PC and console games.

Both commitments have a 10-year term on them, and the commission said Microsoft's remedies also ensured that streaming games will have the same quality and content as traditionally downloaded titles.

In a post on Twitter, Microsoft vice chair and president Brad Smith said the commitment to license Activision Blizzard games to competing companies would apply globally.

"These commitments fully address the competition concerns identified by the Commission and represent a significant improvement for cloud game streaming compared to the current situation," the commission said (emphasis in original).

"They will empower millions of EEA consumers to stream Activision's games using any cloud gaming services operating in the EEA, provided they are purchased in an online store or included in an active multi-game subscription in the EEA.

"In addition, the availability of Activision's popular games for streaming via all cloud game streaming services will boost the development of this dynamic technology in the EEA. Ultimately, the commitments will unlock significant benefits for competition and consumers, by bringing Activision's games to new platforms, including smaller EU players, and to more devices than before."

An independent trustee will be appointed to monitor Microsoft's compliance with its proposed remedies.

The deal still faces obstacles in the UK, where the Competition and Markets Authority has blocked it pending appeal, and the US, where the Federal Trade Commission has filed suit to stop the acquisition.

The UK CMA released a statement on the EU approval, saying, "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 ten 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."

Activision Blizzard CEO Bobby Kotick also released a statement welcoming the ruling, saying, "The EC conducted an extremely thorough, deliberate process to gain a comprehensive understanding of gaming. As a result, they approved our merger with Microsoft, although they required stringent remedies to ensure robust competition in our rapidly growing industry."

For more, check out our extensive primer on the various issues surrounding the proposed acquisition.