THE European Commission has approved under the EU Merger Regulation the proposed acquisition of Activision Blizzard (“Activision”) by Microsoft. Approval is contingent on full compliance with the commitments offered by Microsoft. The commitments fully address the competition concerns identified by the Commission and represent a significant improvement for cloud gaming compared to the current situation.
The decision follows a thorough investigation into Microsoft’s proposed acquisition of Activision. As always, the Commission based its decision on hard evidence and detailed information and feedback from competitors and customers, including game developers and distributors as well as cloud game streaming platforms in the EU. .
Today’s decision follows an extensive investigation into Microsoft’s proposed acquisition of Activision. Both companies develop and publish games for PC, consoles and mobile devices and distribute PC games. Microsoft also distributes games for consoles and offers the Xbox console as well as a wide range of products and services, including the “Windows” PC operating system. Activision’s games portfolio includes famous franchises such as Call of Duty, World of Warcraft, Overwatch and Diablo.
The Commission’s preliminary investigation concluded that Microsoft may harm competition (i) in the distribution of console and PC video games, including multi-game subscription services and cloud game streaming services; and (ii) in the supply of computer operating systems.
The Commission’s in-depth market investigation showed that Microsoft could not harm competing consoles and competing multi-game subscription services. At the same time, he confirmed that Microsoft could harm competition in the distribution of games via cloud game streaming services and that its position in the PC operating system market would be strengthened.
In particular, the Commission found that:
– Microsoft would have no incentive to refuse to distribute Activision’s games to Sony, which is the largest distributor of console games worldwide, including in the European Economic Area (EEA), where there are four consoles Sony PlayStation for each Microsoft Xbox console sold purchased by players. Indeed, Microsoft would have a strong incentive to continue distributing Activision’s games through a device as popular as Sony’s PlayStation.
– Even if Microsoft decides to remove Activision games from the PlayStation, it would not significantly harm competition in the console market. Even though Call of Duty is widely played on console, it is less popular in the EEA than in other parts of the world, and is less popular in the EEA in its genre compared to other markets. Therefore, even without being able to offer that particular game, Sony could leverage its size, vast catalog of games, and position in the market to fend off any attempt to weaken its competitive position.
– Even without this transaction, Activision would not have made its games available for multi-game subscription services, as this would wipe out sales of individual games. Therefore, the situation for third-party multi-game subscription service providers will not change after Microsoft acquires Activision.
– The takeover would harm competition in the distribution of PC and console games through cloud game streaming services, an innovative segment of the market that could change the way many gamers play video games. Despite its potential, cloud game streaming today is very limited. The Commission found that the popularity of Activision’s games could help its growth. Conversely, if Microsoft made Activision’s games exclusive to its own cloud game streaming service, Game Pass Ultimate, and hid them from competing cloud game streaming providers, it would lessen competition in the distribution of cloud game streaming games.
– If Microsoft made Activision’s games exclusive to its own cloud game streaming service, Microsoft could also strengthen Windows’ position in the PC operating system market. This can happen if Microsoft blocks or degrades streaming of Activision games on PCs running operating systems other than Windows.
Proposed corrective measures
To address the competition concerns identified by the Commission in the market for the distribution of PC and console games via cloud game streaming services, Microsoft has offered the following 10-year full license commitments:
– A free license for EEA consumers that would allow them to stream, via any cloud game streaming service of their choice, all current and future Activision Blizzard PC and console games.
– A matching free license to cloud game streaming service providers to allow EEA-based gamers to stream any Activision Blizzard PC and console game.
Currently, Activision Blizzard does not license its games to cloud game streaming services, nor does it stream the games themselves. These licenses will ensure that gamers who have purchased one or more Activision games from a PC or console store, or who have subscribed to a multi-game subscription service that includes Activision games, have the right to stream those games with n any cloud game streaming service. of their choice and play them on any device using any operating system. The remedies also ensure that Activision 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 enable millions of EEA consumers to stream Activision games using any cloud gaming service operating in the EEA, as long as they are purchased from an online store or included in a subscription. active multi-games in the EEA. Additionally, the availability of popular Activision games for streaming through all cloud game streaming services will drive the development of this dynamic technology in the EEA. Ultimately, the commitments will unlock significant competitive and consumer benefits, bringing Activision’s games to new platforms, including smaller players in the EU, and to more devices than previously.
The Commission has carefully examined the effectiveness of the remedies, gathering views from a large number of market participants and stakeholders. In particular, cloud game streaming service providers gave positive feedback and showed interest in licensing. Some of these vendors have already entered into bilateral agreements with Microsoft based on the proposed licenses to distribute Activision’s games after the transaction is completed.
Given market reactions, the Commission concluded that the proposed acquisition, as modified by the commitments, would no longer raise competition concerns and would ultimately unlock significant benefits for competition and consumers. The Commission’s decision is conditional on full compliance with the commitments. Under the supervision of the Commission, an independent administrator will be responsible for monitoring their implementation.