Microsoft’s purchase of Activision Blizzard approved by EU Commission

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, which fully address the competition concerns identified by the Commission.

EU Commission Executive Vice-President Margrethe Vestager, 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.”

Activision Blizzard is a publicly listed company headquartered in Santa Monica, California, US. It is active as a developer and publisher of games for PCs, consoles, and mobile devices as well as a distributor of games for PCs.

Microsoft is a global technology company headquartered in Redmond, Washington, US. It offers a wide range of products and services to customers through the following operating segments: (a) Productivity and Business Processes; (b) Intelligent Cloud; and (c) More Personal Computing. Microsoft is active as a developer and publisher of games for PCs, game consoles, and mobile devices as well as a distributor of games for PCs and consoles. In addition, it offers the Xbox gaming console and related services.

Competition risks identified by EU Commission and the remedies offered by Microsoft

The Commission’s concerna were 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 should Microsoft make Activision’s games exclusive to its own cloud game streaming service.

Microsoft purchase Activision Blizzard_competition concerns and remedies_EU Commission
Infographic, EU Commission.

Microsoft offered the following comprehensive licensing commitments, with a 10-year duration:

1.- 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;

2.- 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.

A growing but still reduced market that needs for broader game catalogues and high speed Internet to develop

Cloud game streaming, while still nascent, represents a growing industry trend, with increasing availability of streaming platforms, also EU-based. Thanks to this technology, games can run in remote servers and do not need to be installed in the gamers’ end devices. Therefore, cloud game streaming allows gamers to stream games and play them on any device of their choice, even on devices that would not normally support the game (e.g. PCs with an operating system other than Microsoft’s Windows, Smart TVs, smartphones and tablets). Despite its potential, cloud game streaming still represents a very limited part of the overall market for the distribution of games today, accounting only for around 1% of the total worldwide market in 2022. To unleash its potential, cloud game streaming will require broader game catalogues and high-speed internet.

The Commission believes that “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. 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.”

Image over the headline.- EU Commission Executive Vice-President Margrethe Vestager, in charge of competition policy. © European Union, 2023. Photo, Claudio Centonze.

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