Update: The Communications Workers of America (CWA) issued a statement in praise of the EU regulators, and talked about how it could affect the FTC's stance on the merger.
May 15, 2023
EU regulators have approved Microsoft's proposed Activision Blizzard merger, and claims the deal "represents a significant improvement for cloud gaming as compared to the current situation."
The move comes weeks after UK regulator, the Competition and Markets Authority (CMA), chose to block the deal over fears it would allow Microsoft to dominate the nascent cloud gaming market.
Although EU regulators initially shared those fears, it now appears convinced that Microsoft will continue to offer access to key Activision Blizzard franchises through rival hardware and cloud platforms.
That's because the Xbox maker has penned what the EU described as a series of "comprehensive licensing agreements, with a 10-year duration" that will see Activision Blizzard titles, including Call of Duty, appear on streaming platforms such as Nvidia GeForce.
It has also offered a corresponding free license to cloud game streaming service providers that will allow players in the European Economic Area to "stream any [of] Activision Blizzard's PC and console games."
"Today, Activision Blizzard does not license its games to cloud game streaming services, nor does it stream the games itself," reads a press release from the European Commission , detailing how Microsoft worked to "fully address" its competition concerns.
"These licenses will ensure that gamers that have purchased one or more Activision games on a PC or console store, or that have subscribed to a multi-game subscription service that includes Activision games, have the right to stream those games with any cloud game streaming service of their choice and play them on any device using any operating system. The remedies also ensure that Activision's games available for streaming will have the same quality and content as games available for traditional download."
Notably, the EU claims Microsoft's range of 10-year partnerships represent an improvement on the current status quo, and believes they will help "empower millions" of European consumers to stream Activision titles through the cloud.
Crucially, the EU also doesn't believe Microsoft will refuse to distribute Activision Blizzard titles on PlayStation platforms, largely because the company has "no incentive" to cut Sony out of the equation. Playing devil's advocate, it added that Sony wouldn't experience "significant harm" should Microsoft eventually make key Activision Blizzard titles platform exclusive.
"Sony could leverage its size, extensive games catalogue and market position to fend off any attempt to weaken its competitive position," continues the press release, suggesting Microsoft's rival is more than capable of defending its corner.
In short, the EU said it "carefully investigated" both the proposed deal and Microsoft's remedies, collecting evidence from market participants and stakeholders, and concluded the modified deal no longer raises competition concerns.
"Video games attract billions of users all over the world. In such a fast-growing and dynamic industry, it is crucial to protect competition and innovation. Our decision represents an important step in this direction, by bringing Activision’s popular games to many more devices and consumers than before thanks to cloud game streaming," said Margrethe Vestager, the European Commission EVP in charge of competition policy.
"The commitments offered by Microsoft will enable for the first time the streaming of such games in any cloud game streaming services, enhancing competition and opportunities for growth."
Commenting on the decision in a statement sent to Game Developer, Activision Blizzard CEO Bobby Kotick said the European Commission conducted a "extremely thorough" investigation that ultimately required some "stringent remedies." He added that Activision Blizzard now plans to "meaningfully expand our investment and workforce throughout the EU."
"We’re excited for the benefits our transaction brings to players in Europe and around the world," added Kotick. "The majority of the world’s gamers play on mobile phones. Europe has played a pivotal role in the development of gaming, especially mobile gaming, and we expect European game developers will continue to drive growth and innovation.
"Our talented teams in Sweden, Spain, Germany, Romania, Poland and many other European countries have the skills, ambition, and government support needed to compete effectively on a global scale. We expect these teams to grow and prosper given their governments’ firm but pragmatic approach to gaming."
Update: The Communication Workers of America (CWA) released a statement regarding the EU's approval of Microsoft's merger with Activision Blizzard. The labor union stated last year it would back the Xbox maker's acquisition attempts.
In its statement, the CWA called the decision "welcome news" that may help the FTC change its stance. The US regulator sued Microsoft in December 2022 to block the merger, which is still ongoing as of this past March.
For the CWA, the belief is that this new approval will give the FTC a chance to "transform the video game and technology labor market by providing a clear path to collective bargaining for almost 10,000 workers."
It then cited a labor neutrality agreement it struck with Microsoft in June 2022, and Microsoft's continued neutrality as subsidiaries (current and in-progress) such as ZeniMax and Blizzard Albany have unionized their QA workers.
The statement concluded with hope that "the commitments Microsoft has made to the European Commission regarding consumer access to video games, which address similar concerns the FTC has raised about the transaction, will chart a path for a settlement in the U.S."
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