European regulators have approved Microsoft’s $69 billion acquisition of Activision Blizzard, handing the technology giant a victory at a time when the deal is being challenged in other countries.
While the merger could harm competition in some respects, particularly in the fast-growing market for cloud gaming services, concessions by Microsoft were enough to mitigate antitrust concerns stemming from the deal, the European Commission said in a statement.
Among Microsoft’s offers were a 10-year commitment letting European consumers play Activision titles on any cloud gaming service. Microsoft also committed that it would not downgrade the quality or content of its games made available on rival streaming platforms.
“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,” the Commission said.
The Microsoft deal would make the company the third largest game publisher in the world after Tencent and Sony.
Not a done deal
The blockbuster deal is still in jeopardy because British regulators have rejected it and U.S. authorities are trying to thwart it.
The deal, sweetened by Microsoft’s promises to free up licensing conditions for cloud gaming, “would no longer raise competition concerns and would ultimately unlock significant benefits for competition and consumers,” said the European Commission, the 27-nation bloc’s executive arm and top antitrust watchdog.
The all-cash deal announced more than a year ago has been scrutinized by regulators around the world over fears that it would give Microsoft and its Xbox console control of Activision’s hit franchises like Call of Duty and World of Warcraft.
Fierce opposition has been driven by rival Sony, which makes the PlayStation gaming system.
Microsoft sought to counter the resistance by striking a deal with Nintendo to license Activision titles like Call of Duty for 10 years and offering the same to Sony if the deal went ahead.
Following its review, the European Commission dismissed the possibility that Microsoft would cut off its games from PlayStation, saying that excluding the most popular gaming console would put a big dent in its profits.
The emerging cloud gaming market received closer scrutiny from Brussels. Cloud gaming frees players from buying expensive consoles and gaming computers by allowing them to stream games they own to tablets, phones and other devices, typically through a cloud platform that may charge a fee.
The commission approved the deal after accepting Microsoft’s offer to modify its licensing agreements to allow users and any cloud gaming platforms to stream its titles without paying any royalties for 10 years.
Microsoft has already announced deals to bring Xbox PC games to cloud gaming platforms operated by chipmaker Nvidia and independent player Boosteroid.
Activision games aren’t available on cloud services, but the commission noted that the licensing commitments could expand the cloud gaming market “by bringing Activision’s games to new platforms, including smaller EU players, and to more devices than before.”
The EU decision is at odds with the stance taken by British antitrust regulators, who last month upended the biggest tech deal in history over concerns it would stifle competition in the small but rapidly growing cloud gaming market.
The companies are appealing the U.K. Competition and Markets Authority’s decision to a tribunal, but history doesn’t bode well.
The watchdog previously denied Facebook parent Meta’s purchase of Giphy over concerns it would limit innovation and competition. The social media giant was ultimately forced to sell off the GIF-sharing platform after it lost an appeal.
The EU’s decision could enhance Microsoft’s chances as it faces down U.S. regulators. The Federal Trade Commission is taking the company to court to block the deal, with a trial before the FTC’s in-house judge set to begin Aug. 2.
