The European Commission is expected to release a decision on the Microsoft – Activision deal today.
Bloomberg, alongside Reuters, have reported that not only is the EU releasing their decision a week early, they are expected to approve the deal. Of course, the same prediction was made of the UK and the FTC before, so is there a reason to believe things will turn out differently today?
In fact, there is a good reason to do so. The head of the European Commission on competition matters, Margrethe Vestager, stated that the EU can come to different conclusions than other regulators when it comes to deals like that between Microsoft and Activision. It’s a statement that hints at the tensions between the UK and EU following Brexit, but it may also simply reflect the differences in the regulators in general.
The EU had previously delayed their decision on the Microsoft-Activision deal to May 22, 2023. At the time, Vestager stated that regulators should not be in a race to get to their decisions on such deals. This also sounded like a criticism intended for both the CMA and the FTC. The FTC in particular, went ahead with a lawsuit blocking the deal, that was criticized by many observers and has a strong chance of failing in front of the FTC courts. You can read the opinion of one such observer here.
Is the FTC really a factor in the EU’s decision? Possibly. We had reported last January on the allegation that the FTC blocked the EU from approving the Microsoft – Activision deal early, by suing Microsoft preemptively. At the time, the thread of logic is that if the EU had done their approval early, it would look bad for other regulators to then block the deal, as they would have to argue why they came to a different conclusion.
The speculation here is that the regulators would want to extract as many concessions from Microsoft as possible to get the deal approved, but the situation is completely different now. The EU is now in a position where they have to explain why they came to a different conclusion than the FTC and CMA by approving the deal, assuming that is their decision. It’s also a strange situation where both the US and UK just blocked business from happening in their regions, given how so many other countries already gave their approval for it. In case you don’t see it, this is about more than regulators losing and saving face. It will be a huge embarrassment to the US and UK if the Microsoft Activision deal goes through to benefit every other country, and a real potential loss of income for those two.
Perhaps what’s most important to remember here is that the day Microsoft President Brad Smith had his press conference about the deal in Europe, he just finished talking to the EU. This was the same hearing attended by Sony President Jim Ryan. Yes, this is also the same event where Lulu Cheng-Meservey revealed that Jim said that Sony wanted to simply block the deal.
That major hearing happened at the EU, and thus far they have been careful not to drop hints on where they were leaning on their decision. If the rumors are correct, the notes on their decision will be vital in how it could influence future outcomes in the UK and US.
