European Union Regulators Approve Microsoft's $69 Billion Acquisition of Activision
Key Highlights :
The European Union (EU) has given Microsoft's faltering $69 billion bid for Activision a glimmer of hope, approving the acquisition in what would be the largest consumer tech deal in two decades. The approval has come after Microsoft made concessions to ensure that rival companies of new online gaming services would have continued access to titles developed by Activision, such as the hugely popular Call of Duty.
However, the blockbuster acquisition still faces an uphill climb, as American and British regulators have objected to the deal on the grounds that it would undercut competition. Opposition to the acquisition has centered in part on so-called cloud gaming, which lets people stream games on phones, tablets and other devices, potentially eliminating the need for hardware like consoles.
The European Commission, the executive body for the 27-nation bloc, gave its approval after Microsoft agreed to guarantee for 10 years that gamers would be able to play Activision titles on cloud gaming services being developed by other companies, such as Nvidia. After negotiating the concessions with Microsoft, European Union officials said they concluded that the deal could go through, particularly because the cloud gaming market was still so small.
Many Activision titles that are not currently playable on smaller cloud gaming services would now be available, providing a consumer boost for the new technology, the regulators said. Microsoft said the concessions would benefit consumers. “The European Commission has required Microsoft to license popular Activision Blizzard games automatically to competing cloud gaming services,” said Brad Smith, the president of Microsoft. “This will apply globally and will empower millions of consumers worldwide to play these games on any device they choose.”
The European Commission said the deal would not harm the console market because Microsoft would not have an incentive to deny rivals, such as the Sony PlayStation, access to Activision titles without sacrificing profit. In the European Union, PlayStation has a much larger market share than Xbox.
The deal shows the difficulty of reaching a global consensus to regulate an evolving technology industry. While policymakers on both sides of the Atlantic have expressed concern about the growing power of the tech industry, differences remain about when and how to intervene. The approval on Monday is a rare occasion where European regulators appear to be more accommodating than the United States.
Approval in Brussels sets up a complicated legal chessboard for Microsoft and Activision, with few moves left to play. The fate of the deal will now hang largely on the legal process in the United States and Britain. The two companies must show that the deal would not constrain competition, particularly if Microsoft would guarantee access to Activision titles.
While American courts have shown they can be more open to overruling government antitrust initiatives, in Britain it is less common for verdicts by the Competition and Markets Authority to be reversed. A loss in either country could be fatal for the deal because of the globalized and interconnected nature of the video game industry and the technology it uses.
