EU Approves Microsoft, Activision Acquisition With Some Minor Stipulations
from the promises-promises dept
One hurdle defeated, two more to go. For months now, we have been discussing Microsoft’s proposed acquisition of Activision for $69 billion. What would be the largest video game studio acquisition in history has faced several hurdles along the way, primarily from the EU, the UK, and the United States. While the UK’s CMA has already formally nixxed the purchase (appeal by Microsoft pending) and the FTC decision is looming, leaks had already suggested months ago that the EU was set to approve the deal.
And now those leaks have been proven prescient. The European Commission has formally approved of the purchase. To get there, the EC relied on three points: it believes Microsoft’s promises to keep its titles available to other cloud-gaming providers, it thumbs its nose at the popularity of Call of Duty in the EU, and, my favorite, it claims that Microsoft wouldn’t make popular titles Xbox exclusives because Microsoft has so badly lost the console wars to Sony. Yes, seriously.
As to those promises:
Because of those concerns, the EC’s decision is conditional on certain assurances Microsoft has made to preserve competition. Those include a free license for any cloud streaming service to allow its users access to “any Activision Blizzard PC and console games” for at least 10 years. Anyone who has purchased any current or upcoming Activision-Blizzard games (or accessed them through a subscription) will “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” throughout Europe.
With this commitment in place, the EC says it’s satisfied that the merger will “represent a significant improvement for cloud game streaming compared to the current situation.” The Commission notes that “cloud game streaming service providers gave positive feedback and showed interest in the licenses” and points to existing Microsoft agreements with cloud providers such as Boosteroid.
Which… fine, whatever. Cloud gaming isn’t completely without adoption, but it also is a fraction of the total gaming market. If, when it comes to cloud-gaming specifically, the EC wants to buy into Microsoft’s totally coincidental 10 year deals it made after the purchase, so be it. I, and the industry generally, have been more focused on the non-cloud console market. What happens if Microsoft decides to make Call of Duty an Xbox/PC exclusive? Well, to start, no big deal, according to the EC, because the series isn’t as popular in the EU as it is in America.
Even if Microsoft did make the Call of Duty franchise an Xbox exclusive, the decision would “not significantly harm competition in the consoles market” because the series “is less popular in [Europe] than in other regions of the world, and is less popular in [Europe] within its genre compared to other markets,” European regulators wrote.
And that’s true. It’s hard to break this down to the EU specifically, or by game specifically, but sources I’m looking at suggest that Call of Duty titles quite recently have been the number one seller in the EU, even if those sales are outpaced by the Americas in total numbers. I don’t think the numbers warrant the hand-waving routine the EC is undergoing here, but that also wasn’t their only comment on the matter. The EC didn’t think Microsoft would ever consider pulling CoD off of the PlayStation due to Microsoft being outpaced by its rival in sales so badly.
In the end, European regulators said they were not concerned about the merger’s effects on the market for non-cloud console gaming. Despite Sony’s concerns, Microsoft “would have no incentive to refuse to distribute Activision’s games to Sony” after a merger, the EC said, partly because “there are four Sony PlayStation consoles for every Microsoft Xbox console bought by gamers” across Europe.
And there you have it: the EC has approved the acquisition.
As I stated earlier, this isn’t the end of the story. Microsoft still has its appeal of the CMA to contend with, nevermind the far more important potential battle with the FTC in America. Were the latter to refuse to allow this to move forward, that would probably be the end of this deal. In the meantime, I suppose Microsoft should be focusing on ensuring it can keep its promises to the EC while also committing to not accidentally gaining console market share on Sony.
Filed Under: antitrust, call of duty, cloud streaming, competition, eu, european commission, exclusives, video games
Companies: activision blizzard, microsoft
Comments on “EU Approves Microsoft, Activision Acquisition With Some Minor Stipulations”
other cloud-gaming providers
What cloud-gaming providers? Why cloud-gaming? WTF even?
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There’s several cloud gaming platforms, with varying libraries and capabilities.
Cloud gaming allows you access games without owning specific hardware – for example, XBox allows you to play games via streaming without owning a Windows PC or XBox, or allows you to play Series X/S only games on XBox One hardware that can’t handle them natively.
The theory is that because XBox have such a strong cloud platform and they own and control so much of the infrastructure that underlies it (Azure), they have an unfair advantage compare to others. But, given that the options for PS exclusive games is limited to “buy a PS” and the options for XBox cloud is “own a compatible device and gamepad, which includes MAcBooks, tablets and phones”, it’s fairly weak. People should keep an eye on them, but if you’re after consumer benefit, they’re ahead of the game for now.
Why ever would they do the thing they already admitted they plan to?
In the end, European regulators said they were not concerned about the merger’s effects on the market for non-cloud console gaming. Despite Sony’s concerns, Microsoft “would have no incentive to refuse to distribute Activision’s games to Sony” after a merger, the EC said, partly because “there are four Sony PlayStation consoles for every Microsoft Xbox console bought by gamers” across Europe.
If you ignore that they already admitted that they very much plan to do exactly that with CoD, and nixed another in-development cross platform game release(not that PS owners missed out on Redfall as it turns out) showing that they can and will pull games off of other platforms and make them exclusive then sure, everyone can take them at their word when they pinky-promise they won’t do that(again).
From an earlier article:
“Microsoft considers that a period of 10 years is sufficient for Sony, as a leading publisher and console platform, to develop alternatives to CoD. […] The 10-year term will extend into the next console generation. […] Moreover, the practical effect of the remedy will go beyond the 10-year period, since games downloaded in the final year of the remedy can continue to be played for the lifetime of that console (and beyond, with backwards compatibility).”
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hate to say it, but that wasn’t a “we’re gonna make it exclusive!” so much as a “Surely in 10 years if Sony is as good as they say, they can come up with an alternative”
Ya know, remember the “Halo Killer” series? Killzone and Resistance? 😛
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And Sony feel the need to make their own game of that sort after the ‘we pinky-promise we’ll keep it on other consoles for ten years’ other than because CoD was made Xbox exclusive why…?
And the consolidation of the videogame industry marches on. Yayy~
I still find the overemphasis on cloud gaming to be a bit ridiculous. Yes, Microsoft has the biggest cloud gaming service available right now, but cloud gaming has such a tiny portion of the market share that it is still fairly niche, and that doesn’t seem to be changing anytime soon.
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Cloud gaming and mobile gaming will go hand in hand though, and the latter is the biggest section of the market eclipsing both PC and console. Microsoft has the lions share of the cloud market right now and with their control of Azure that will only be cemented in the coming years. Not everyone can spin up cloud streaming infrastructure and the only realistic way new companies can enter that market is through Azure or AWS giving Microsoft a lot of power in the market. Combine that with the fact this acquisition included King and you have a recipe for taking Xcloud into the biggest gaming market.
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Not to mention you can’t really go after Microsoft on antitrust grounds when it comes to mobile gaming. It just doesn’t have enough present to even raise the shadow of an argument in that market.
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“right now”
Those are the key words. Microsoft are already committed to making xCloud available on all sorts of non-Microsoft devices, and they make games available for owners of last gen XBoxes as well. Given the massive production problems that faced the current gen (some COVID-related, some not), it would be a good strategy to focus on this at least as much as native console hardware. In which case, while it’s not necessarily a massive concern right now, it would well be in a decade’s time.
I think the next test might be Starfield, the upcoming XBox/PC exclusive from Bethesda. There might be a lot of people who play that through Game Pass, since it will be added there day one and can be played through streaming and a one month sub to GP is way cheaper than buying an XBox.
The CMA seems to be the only one looking past the next 10 years (as any good regulator should) if the pathetic limited concessions Microsoft offered are enough to sway the EC.
Mark my words, this acquisition is only good for Microsoft, everyone else will suffer.
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Kotick and the other c-suite dickheads at ActiBlizKing will probably make out like bandits.
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Define “suffer”. If in 10 years I still have to buy a Sony console to access their exclusive games but new Game Pass releases are available to Mac, Nintendo, Steam Deck, etc. users (as it is now), that’s not Xbox’s fault, and the only ones “suffering” are the ones trying to play PS exclusives without dedicated hardware.
When was the last time a merger between technology companies wasn’t approved? At this point, seeking approval is a mere formality.
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This one has been rejected by the UK, though that might change on appeal and the reasoning seems misguided at best for the most part.
The main thing with this one is coming up with an objection that doesn’t already apply more strenuously to Sony. That’s why cloud has become such a big sticking point – everything else is something Sony are the worst offenders with.
Company files for merger approval.
Someone objects.
Court/government blocks merger.
The companies involved make some small concessions and/or hollow promises that they won’t do the very things everyone knows they’re going to do if the merger is approved.
Merger gets approved.