The European Union has approved Microsoft's $69 billion acquisition of Activision Blizzard, one of the world's largest gaming companies. The EU’s executive arm, the European Commission, approved the deal after Microsoft offered remedies in the emerging area of cloud gaming that would allay antitrust concerns.
| Article and Schedule Quiz | Start Test! |
Remedies offered by Microsoft:
The remedies Microsoft offered centered around allowing users to stream Activision games they purchase on any cloud streaming platform. This was a major issue for regulators throughout the world, who were looking into whether Microsoft's acquisition of Activision would restrict competition in the console and cloud gaming markets. The UK’s competition authority blocked the deal last month over concerns it would reduce competition in the nascent cloud gaming market. The authority feared that Microsoft would make Activision’s key games, such as Call of Duty, exclusive to its own cloud gaming platforms, a move that would harm competition.
Impact on competition in the console and cloud gaming market:
Microsoft has staked its future in the gaming market on cloud gaming, a nascent part of the industry. The EU Commission found that the Activision takeover would not reduce competition in the console market given Sony’s dominance with the PlayStation.
Cloud gaming allows people to stream games from servers, removing the need for expensive dedicated hardware such as consoles. These games could be played on existing devices like TVs, smartphones, and laptops. The key to success for cloud gaming is a large catalogue of games that users could immediately access via a subscription service, like Netflix.
Microsoft’s solution to allay competition concerns:
Microsoft will offer royalty-free licenses to cloud gaming platforms to stream Activision games if a consumer has purchased them. Customers who have purchased or will purchase an Activision game will be able to stream these titles on their preferred cloud gaming platform. The idea is that gamers do not necessarily need to stream the game where they buy it.
U.S. Federal Trade Commission’s ongoing investigation:
Despite the EU approval, Microsoft still faces a tough task of convincing rivals such as Sony and other regulators, including the U.S. Federal Trade Commission, that the Activision takeover will not harm competition. The case between the FTC and Microsoft is still ongoing.
