Following reports last week that the European Commission would approve Microsoft’s acquisition of Activision Blizzard, today, it’s official. “The European Commission has approved, under the EU Merger Regulation, the proposed acquisition of Activision Blizzard (‘Activision’) by Microsoft. The approval is conditional on full compliance with the commitments offered by Microsoft,” the press release read. One of the biggest issues that made the CMA block the merger last month was how it could potentially harm the future of cloud gaming. In the Commission’s preliminary investigation, they found that “Microsoft could harm competition in the distribution of console and PC video games, including multi-game subscription services and cloud game streaming services; and in the supply of PC operating systems.” The Commission’s in-depth market investigation indicated that Microsoft would not be able to harm rival consoles and rival multi-game subscription services. At the same time, it confirmed that Microsoft could harm competition in the distribution of games via cloud game streaming services and that its position in the market for PC operating systems would be strengthened. With these thoughts in mind, Microsoft offered two “commitments that fully address the competition concerns identified by the Commission and represent a significant improvement for cloud gaming as compared to the current situation.”
In its in-depth market investigation, the Commission found that Microsoft would have no incentive to refuse to distribute Activision’s games to Sony, which is the leading distributor of console games worldwide; Even if Microsoft did decide to withdraw Actvision’s games from PlayStation, this would not significantly harm competition in the consoles market; Activision would not have made its games available for multi-game subscription services, even without this transaction; the acquisition would harm competition in the distribution of PC and console games via cloud game streaming services, an innovative market segment that could transform the way many gamers play video games; Microsoft could strengthen the position of Windows in the market of PC operating systems if Microsoft made Actvision’s games exclusive to its own cloud streaming service. The Commission notes this could be the case, should Microsoft hinder or degrade the streaming of Activision’s games on PCs using operating systems other than Windows.
Microsoft’s comprehensive licensing commitments come with a 10-year duration. The first is 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. The second is a corresponding free license to cloud game streaming service providers to allow EEA-based gamers to stream any Activision Blizzard’s PC and console games.
According to the Commission, “these licenses will ensure that gamers that have purchased one or more Activision games on a PC or console store, or that have subscribed to a multi-game subscription service that includes Activision games, have the right to stream those games with any cloud game streaming service of their choice and play them on any device using any operating system. The remedies also ensure that Activision’s games available for streaming will have the same quality and content as games available for traditional download.”
“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. 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,” the Commission wrote. “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.”
Margrethe Vestager, Executive Vice President in charge of competition policy said “Video games attract billions of users all over the world. In such a fast-growing and dynamic industry, it is crucial to protect competition and innovation. Our decision represents an important step in this direction, by bringing Activision’s popular games to many more devices and consumers than before thanks to cloud game streaming. The commitments offered by Microsoft will enable for the first time the streaming of such games in any cloud game streaming services, enhancing competition and opportunities for growth.”