Tuesday, 16 May 2023 15:43

Microsoft gets a Green Light from the European Commission on Activision Blizzard Buy

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It looks like the folks at the European Commission have decided that Microsoft buying out Activision Blizzard for $69 billion (with a B) is not going to be a violation of their antitrust rules. The approval means that there are only a few roadblocks to the deal going through. South Korea and China have not decided yet, while the US and UK have challenged it. The deal has been called the world’s biggest gaming takeover and is viewed by many as a bad thing for competition as it would leave Microsoft in control of a majority of game development groups.

We previously reported that Microsoft has until May 24th to appeal to the UK Competition and Markets Authority’s decision to block the deal (and put some tidy restrictions on getting around the deal). They also must get around the US FTC’s legal challenge to the acquisition. These two legal hurdles could take months to resolve and still prevent this from happening.

The concern, as we understand it, is in Microsoft’s ability to lock other competitors out of the market by controlling the content available. This is not an unjustified position to take in light of typical corporate workings. Even though Microsoft has gone on a whirlwind of contingent licensing agreements (contingent on the purchase being allowed), there are still many chances for Microsoft to put a squeeze on the market. In terms of agreements, most of them expire in 10 years meaning that Microsoft still holds most of the cards in their pocket.

The European Commission seems to think that licensing deals with one company holding the pen is pro-competition though (maybe they use a different dictionary). With statements like “Actually they significantly improve the condition for cloud game streaming compared to the present situation, which is why we actually consider them pro-competitive,” from EU Antirust chief Margrethe Vestager.

Considering the fact that Microsoft has PC gaming (with Windows), the Xbox platform and other cloud gaming services, giving them full control over a laundry list of popular game titles does not seem pro-competitive to me. Even accounting for cloud gaming (which is less than 1% of the gaming market), this move seems to favor Microsoft more than it does any consumer. With a 1% stake in the market, cloud gaming is a big gamble for the commission to bet on. Looking at the landscape it looks more like an excuse than a concrete reason to allow this deal to go ahead.

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