The European Commission approved Microsoft’s acquisition of Activision Blizzard today after the software giant addressed its concerns regarding the distribution of its games on competing cloud gaming services. Indeed, Microsoft has agreed to automatically license popular Activision Blizzard games to competing cloud gaming services for the next 10 years.
The UK’s Competition and Markets Authority (CMA) shared the same concerns as the European Commission regarding competition in the cloud gaming market. However, despite the EU Commission saying today that Microsoft’s various remedies represent “a significant improvement for cloud game streaming compared to the current situation,” the CMA believes that it isn’t good enough.
In a series of tweets published after the EU’s approval of the acquisition, the CMA explained why it’s not going to change its stance regarding the deal. You can read the CMA’s response in full below:
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 10 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.
Despite Microsoft making significant concessions, the CMA still believes that Microsoft will remain in a position to dominate the cloud gaming industry. This isn’t exactly easy to understand after Microsoft agreed to give a free license to all consumers in the EU to stream any Activision Blizzard game they own on the cloud gaming service of their choice.
The EU Commission claimed today that Microsoft’s commitments will “unlock significant benefits for competition and consumers,” including “smaller EU players.” The Commission also emphasized that Microsoft’s competitors have also expressed support for the deal.
In an email sent to Activision Blizzard employees today, CEO Bobby Kotick praised the EU’s decision to approve the deal and highlighted the positive impact it will have on the video games industry. “Careful regulators in numerous other countries have already approved the merger. By joining them today, the EC has once again demonstrated their rigorous, fair and sensible approach with the creation of appropriate regulatory guardrails that ensure competition in important growth industries,” Kotick wrote.
Microsoft already said that it will appeal the CMA’s decision, but it’s quite possible that the company won’t be able to convince the UK regulator to approve the deal. In the US, the company is also facing a lawsuit from the Federal Trade Commission. In any case, it doesn’t look like Microsoft will be able to close the deal before the end of its fiscal year in June 2023.