EU clears Microsoft deal blocked by the UK
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Loading... - Ahmad Salah
- 23 May 2023
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Microsoft secured approval from the European Union for its $69 billion gaming deal, which had previously been vetoed by the United Kingdom. Margrethe Vestager, the Competition Commissioner, stated that Microsoft's groundbreaking offer to license Activision Blizzard's games for cloud gaming would ignite the market. However, there were discrepancies in the assessment of cloud gaming between the European Commission and the U.K.'s Competition and Markets Authority (CMA). The U.K. anticipated Microsoft's dominance in cloud gaming to grow at a faster rate.
Vestager emphasized that different jurisdictions often have diverging perspectives, despite working closely with the CMA and U.S. antitrust authorities. In April, the U.K. merger watchdog blocked the deal, concerned that it would disrupt the rapidly expanding cloud gaming market. Microsoft is presently appealing the decision in U.K. courts, while the U.S. Federal Trade Commission is also seeking court confirmation to veto the deal.
Vestager further noted that the gaming preferences in Europe differ from those in the U.S., with a greater emphasis on football (FIFA) rather than shooter games. This disparity in game preferences contributes to varying market shares across different regions.
Microsoft's acquisition of Activision, the most expensive transaction ever made for a tech company, will enable the software giant to incorporate highly popular games like "Call of Duty" and "World of Warcraft" into its software empire. The company's proposal to license games to rival gaming platforms for a decade will significantly enhance the prospects of cloud game streaming. Vestager regarded this as a straightforward remedy that would expand access to numerous games.
The Commission remains resolute in its decision, confident that it promotes healthy competition. Vestager anticipates the CMA defending its stance on the matter. She emphasized the immense potential of the cloud streaming market and its significance for future gaming experiences.
CMA Chief Executive Sarah Cardell reaffirmed the regulator's decision, emphasizing concerns about Microsoft setting the terms and conditions of the cloud gaming market for the next decade. Cardell argued that this would replace a free and competitive market with a regulated one.
The European Commission noted that cloud gaming currently constitutes only about 1 percent of the global gaming market as of 2022. Its growth necessitates wider game catalogs and high-speed internet availability. Microsoft and Activision's market share for personal computers and consoles significantly trails behind Sony's 80 percent dominance. The Commission found no evidence that Microsoft would withhold Activision games from Sony, and even if it did, the impact on competition would be minimal since "Call of Duty" has less popularity in Europe compared to other markets. Furthermore, Sony has the capacity to protect its competitive position.
Microsoft President Brad Smith stated that the Commission mandated the automatic licensing of Activision games to competing cloud gaming services. This offer will apply worldwide, allowing players to enjoy games on any device.
Bobby Kotick, the Chief Executive of Activision, expressed enthusiasm about expanding investments and the workforce in Europe following the EU approval.
The EU executive conducted two rounds of testing Microsoft's licensing offer with industry players and received positive feedback, indicating that other platforms would take advantage of the licenses. To ensure compliance, a monitoring trustee will oversee Microsoft's offer, and the company may face fines for any violations.
