EU Regulator Explains Where They Disagreed With UK’s Microsoft ABK Block

Microsoft is still on the hunt to acquire Activision Blizzard. The company offered a bid of nearly $69 billion, leaving quite a few regulators to go through this deal closely. However, while some regulators have given the green light, a major regulator recently shot down the idea. UK’s CMA took a firm stance against the deal while the European Commission recently approved it. Now the head of the European Commission, Margrethe Vestager, has spoken out about why they opted to approve this deal.

You can view the entire speech given right here. Essentially, Vestager offered insight into their views on approving and blocking deals. Ultimately, it’s very much a case-specific assessment to see how mergers will play a role in any given industry. Within the speech, the regulator noted that their decision might not always align with every other jurisdiction, which is why they took a few moments to explain further why they believe the Microsoft and Activision Blizzard merger is compatible with the Single Market but also acts as a positive development. 

Thanks to the remedies Microsoft offered, this deal was passed through, but there were areas that Vestager noted that there were areas they agreed with the CMA. For instance, it was noted that Microsoft wouldn’t make Call of Duty an exclusive title for Microsoft console platforms. This would hurt the company tremendously when it comes to profits that Microsoft could make. Meanwhile, it was also noted that Sony sells about four times more PlayStation consoles than Microsoft sells Xbox consoles. So this deal wasn’t seen as a vertical issue. 

However, where the EU regulators and UK regulators differ is cloud gaming. The UK saw that this deal would eventually hurt cloud gaming as Microsoft would lessen competition. Meanwhile, the EU viewed the remedies offered by Microsoft as positive. Microsoft has signed a decade-long free contract with several cloud gaming providers to allow their games to be streamed on their platforms. This is a plus in the EU regulator’s eyes, as prior, there was no intention for Activision Blizzard to provide games for cloud gaming services. 

Where we diverged with the CMA was on remedies. We accepted a 10-year free license to consumers to allow them to stream all Activision games for which they have a license via any cloud service. And why did we do this instead of blocking the merger? Well, to us, this solution fully addressed our concerns. And on top of that, it had significant procompetitive effects.

Consider the pre-merger situation, where Activision does not license its games to cloud services. So, in this case, the remedy opens the door for smaller cloud services in the EU to offer big games on their platforms, widening choice for gamers. The merits of this remedy was recognised across the spectrum – by developers, by cloud gaming providers, by distributors and of course also by consumer groups. And that is because it unlocked the potential of the cloud market.

Margreth Vestager – EU Regulator

We already know that Microsoft has appealed the CMA’s decision and will once again go through this process for the regulators to consider approving the deal. However, a new discovery recently might have showcased a conflict of interest with the CMA’s decision.