The European Commission concluded that the deal could be approved thanks to Microsoft’s cloud gaming commitments.
The EU’s decision to approve the giant deal comes less than a month after UK regulators blocked Microsoft’s plans. The UK’s Competition and Markets Authority (CMA) has blocked the deal over concerns over the cloud gaming market, saying the takeover could lead to “reduced innovation and less choice for UK gamers in years to come”. Microsoft appealed the decision.
The European Commission has identified solutions to allow the deal to continue through 10-year license agreements that Microsoft has offered to competitors. These include a free license for consumers in EU countries that will allow them to stream via “any relevant cloud gaming service of their choice” all current and future Activision Blizzard licensed PC and console games. Cloud providers will also be offered a free license to make these games available in EU markets via streaming technology.
These licenses are automatic and mean that consumers will have the right to stream Activision Blizzard games they have purchased or are part of a subscription to “any cloud game streaming service of their choice and play them on any ‘any device using any operating system’. Although there is no confirmation, it seems that the European Commission asked Microsoft to offer this automatic license to approve the acquisition, and the Xbox manufacturer will now apply it globally.
“Our decision represents an important step in that direction, bringing popular Activision games to many more devices and consumers than ever before through the ability to stream games to the cloud,” said Margrethe Vestager, vice-president. Executive Chair of Competition Policy at the European Commission. “The commitments offered by Microsoft will enable the streaming of these games on any cloud gaming service for the first time, enhancing competition and opportunities for growth.”
Microsoft has spent the past few months trying to address regulatory concerns over cloud gaming, with deals convincing EU regulators but not the UK. The software giant has signed cloud gaming deals with Boosteroid, Ubitus, and Nvidia to allow Xbox PC games to run on these competing cloud gaming services. A similar agreement with Nintendo was announced in December. All of these ten-year deals also include access to Call of Duty and other Activision Blizzard games, if the deal is approved by regulators.
CMA fears Microsoft’s control over Call of Duty, Overwatch and World of Warcraft will give it a big advantage over rivals in the cloud gaming market – regulator estimates Microsoft owns around 60-70% of purchase global cloud gaming service provider. In fact, she expressed her displeasure with the EU’s decision, making it clear that she stood by her original decision.
However, Microsoft’s UK call will likely take months. Today’s EU decision could help boost Microsoft’s chances of closing this giant deal, but the company is still facing legal battles in the US and UK. Regulators in Saudi Arabia, Brazil, Chile, Serbia, Japan and South Africa have also approved the deal. China, South Korea, New Zealand and Australia are still considering the deal.
Microsoft’s next big hurdle is national approval. The Federal Trade Commission filed a lawsuit to block Microsoft’s deal with Activision Blizzard late last year, and the case is still in the filing stage. The relevant hearing is scheduled for August 2, so we are still months away from knowing the final outcome of the case.