EU regulators approve Microsoft's $69 billion acquisition of Activision Blizzard, UK veto raises significant hurdles

EU regulators approve Microsoft's $69 billion acquisition of Activision Blizzard, UK veto raises significant hurdles

The European Commission (EC) stated that Microsoft has addressed competition concerns while offering 10-year free licensing deals and fair market access for European consumers and cloud game streaming services.

FPJ Web DeskUpdated: Tuesday, May 16, 2023, 08:26 AM IST
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EU regulators approve Microsoft's $69 billion acquisition of Activision Blizzard, UK veto raises significant hurdles | File/ Representative image

European regulators have granted approval for Microsoft's proposed acquisition of Activision Blizzard, the publisher of the popular video game franchise Call of Duty, stated reports.

The European Commission (EC) stated that Microsoft has addressed competition concerns while offering 10-year free licensing deals and fair market access for European consumers and cloud game streaming services. However, the deal still faces challenges, as the UK previously blocked it over fears of harming competition in the emerging cloud gaming sector, a BBC report mentioned.

EU Approval and Market Impact

The report stated that European Commission's approval came after an in-depth market investigation, which concluded that Microsoft's acquisition would not harm rival consoles or multi-game subscription services.

The EC praised Microsoft's commitments, stating that they represent a significant improvement for cloud gaming. Positive feedback from cloud game streaming providers and their interest in licensing agreements further supported the decision.

The acquisition is poised to be the largest deal in gaming history and would give Microsoft control over popular franchises like Call of Duty, World of Warcraft, and Overwatch.

UK Veto and Additional Hurdles

The UK's Competition and Markets Authority (CMA) previously vetoed the deal, citing concerns about Microsoft's dominance in the cloud gaming market. The CMA's decision has prompted experts to warn about significant hurdles for the acquisition's success.

Microsoft and Activision Blizzard have filed an appeal and hired prominent lawyers to fight the UK's veto. Recently, the CMA restricted both companies from acquiring stakes in each other without prior written consent, further complicating the situation.

Cloud Gaming and Microsoft's Strategy

The proposed acquisition is crucial for Microsoft as it aims to compete with Sony in the gaming market. Microsoft's Gamepass service, often referred to as the Netflix of games, is central to their strategy. The company believes that the future of gaming lies in subscription-based libraries rather than individual game purchases.

Although Gamepass has garnered attention, it lacks a substantial number of new titles. Acquiring Activision Blizzard's popular franchises would significantly enhance Microsoft's service, particularly considering the growth of cloud gaming, where players can stream games across multiple devices.

Post-Brexit Friction and Outlook

Microsoft's displeasure with the UK's decision has been vocal, with company President Brad Smith expressing concern about the future of technology business in Britain. The contrasting position of the EU and the UK on the mega-deal could be interpreted as a reflection of post-Brexit frictions.

The EU's approval may indicate that Microsoft's recent licensing agreements with cloud streaming rivals played a role in the decision. Additionally, non-exclusivity agreements with Nintendo and Sony, ensuring Call of Duty availability on their gaming consoles, helped smooth the path for the acquisition. However, negotiations with Valve Corp, owner of the Steam platform, are ongoing.

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