HE European Comission approved, under the EU Merger Regulation, the proposed acquisition of Activision Blizzard (“Activision”) by Microsoft. Approval is subject to full compliance with the commitments offered by Microsoft. The commitments fully address the competition concerns identified by the Commission and represent a significant improvement for cloud gaming compared to the current situation.
The decision follows an in-depth investigation into Microsoft’s proposed acquisition of Activision. As always, the Commission based its decision on solid evidence and extensive information and feedback from competitors and customers, including game developers and distributors, as well as cloud game streaming platforms in the EU.
Today’s decision follows an in-depth investigation into Microsoft’s proposed acquisition of Activision. Both companies develop and publish games for PC, consoles, and mobile devices, and distribute PC games. Microsoft also distributes games for consoles and offers the Xbox console along with a wide range of other products and services, including the “Windows” PC operating system. Activision’s game portfolio includes famous franchises such as Call of Duty, World of Warcraft, Overwatch and Diablo.
The Commission’s preliminary investigation found that Microsoft could harm competition (i) in the distribution of video games for consoles and PC, including multi-game subscription services and cloud game streaming services; and (ii) in the supply of computer operating systems.
The Commission’s in-depth market investigation showed that Microsoft could not harm rival consoles and rival multi-game subscription services. At the same time, he confirmed that Microsoft could harm competition in the distribution of games through cloud game streaming services and that its position in the PC operating system market would be strengthened.
In particular, the Commission found that:
– Microsoft would have no incentive to refuse to distribute Activision’s games to Sony, which is the leading distributor of console games worldwide, including in the European Economic Area (EEA), where there are four Sony PlayStation consoles for every Microsoft’s Xbox console sold and bought by gamers In fact, Microsoft would have a strong incentive to continue distributing Activision’s games through a device as popular as Sony’s PlayStation.
– Even if Microsoft decides to remove Activision games from PlayStation, this would not significantly harm competition in the console market. Although Call of Duty is widely played on consoles, it is less popular in the EEA than in other regions of the world, and is less popular in the EEA in its genre compared to other markets. Therefore, even without being able to offer this particular game, Sony could use its size, extensive catalog of games, and position in the market to defend itself against any attempt to undermine its competitive position.
– Even without this transaction, Activision would not have made its games available to multi-game subscription services, as doing so would eliminate individual game sales. Therefore, the situation for third-party multi-game subscription service providers will not change after Microsoft’s acquisition of Activision.
– The acquisition would harm competition in the distribution of games for PC and consoles through cloud game streaming services, an innovative market segment that could change the way many gamers play video games. Despite its potential, cloud gaming streaming is very limited today. The Commission found that the popularity of Activision’s games could promote its growth. Conversely, if Microsoft made Activision’s games exclusive to its own cloud game streaming service, Game Pass Ultimate, and hid them from competing cloud game streaming providers, it would reduce competition. in cloud game streaming game distribution.
– If Microsoft made Activision games exclusive to its own cloud game streaming service, Microsoft could also strengthen Windows’ position in the PC operating system market. This could happen if Microsoft blocks or downgrades Activision game streaming to PCs running non-Windows operating systems.
The proposed corrective measures
To address the competition concerns identified by the Commission in the market for the distribution of PC and console games via cloud game streaming services, Microsoft offered the following comprehensive 10-year license commitments:
– A free license for consumers in the EEA that would allow them to stream, via any cloud game streaming service of their choice, all current and future Activision Blizzard-licensed PC and console games.
– A free license for cloud game streaming service providers to allow EEA gamers to stream any Activision Blizzard PC and console game.
Activision Blizzard does not currently license its games to cloud game streaming services, nor does it stream the games themselves. These licenses will ensure that players who have purchased one or more Activision games from a PC or console store, or subscribed to a multi-game subscription service that includes Activision games, have the right to stream those games with any Activision service. cloud game streaming. of your choice and play them on any device using any operating system. The remedies also ensure that Activision games available for streaming will have the same quality and content as games available for traditional download.
These commitments fully address the competition concerns identified by the Commission and represent a significant improvement for cloud game streaming compared to the current situation. They will enable millions of EEA consumers to stream Activision games using any cloud gaming service operating in the EEA, as long as they are purchased from an online store or included in an active EEA multi-game subscription. Additionally, the availability of popular Activision games to stream across all cloud game streaming services will fuel the development of this dynamic technology in the EEA. Ultimately, the commitments will unlock significant benefits for competition and consumers, bringing Activision’s games to new platforms, including smaller players in the EU, and to more devices than ever before.
The Commission carefully investigated the effectiveness of the remedies, gathering opinions from a large number of market participants and interested parties. In particular, cloud game streaming service providers have provided positive feedback and shown interest in the licences. Some of these providers have already entered into bilateral agreements with Microsoft based on the proposed licenses to stream Activision’s games once the transaction is complete.
Taking into account the market feedback, the Commission concluded that the proposed acquisition, modified by the commitments, would no longer raise competition concerns and would ultimately generate significant benefits for competition and consumers. The Commission’s decision is subject to full compliance with the commitments. Under the supervision of the Commission, an independent administrator will be responsible for monitoring its implementation.