Microsoft’s $69 billion Activision deal wins EU approval

Microsoft Corp.’s $69 billion takeover of Activision Blizzard Inc. won European Union approval, just weeks after the UK’s merger regulator delivered a shock decision to veto the gaming industry’s biggest ever deal.

The European Commission said its own analysis showed the deal wouldn’t hurt competition after Microsoft vowed to let cloud rivals offer blockbuster titles such as Call of Duty on their own platforms for 10 years. The approval means the fate of the deal now hinges on the firm winning legal challenges in the US and UK - likely an uphill task.

EU antitrust chief Margrethe Vestager on Monday described the deal as “pro-competitive” and that it would “kickstart” the cloud streaming market, which represents just 1-3 per cent of the entire gaming market.

The EU’s blessing flies in the face of negative decisions by the UK’s Competition and Markets Authority, which last month showcased its post-Brexit emergence as a global watchdog, and the US Federal Trade Commission, which sought to block the deal last year.

The EU’s Vestager said the difference in conclusions between EU and UK regulators centered on how quickly the cloud gaming market would develop in the future.

“We agree that the cloud streaming market is a promising market. We may disagree about the speed at which it will develop,” Vestager said, adding that the EU sees a longer development period for cloud gaming than the UK.

While the EU decision offers a glimmer of hope, “it probably doesn’t change much” for Microsoft’s chances of success in legal challenges to the FTC and CMA, according to Bloomberg Intelligence analyst Jennifer Rie.

The European Commission defended its findings, saying that the commitments will empower millions of European consumers “to stream Activision’s games using any cloud gaming services” operating in the EU region.

The commission “conducted an extremely thorough, deliberate process to gain a comprehensive understanding of gaming,” Bobby Kotick, Activision CEO, said. “As a result, they approved our merger with Microsoft, although they required stringent remedies to ensure robust competition in our rapidly growing industry.”

By contrast, the CMA said that the deal would reinforce Microsoft’s advantage in the cloud gaming market by giving it control over a number of leading games also including Overwatch and World of Warcraft. The UK watchdog found that without the merger Activision would be able to start providing games on cloud platforms in the future.

“Microsoft’s proposals, accepted by the commission today, would allow Microsoft to set the terms and conditions for this market for the next 10 years,” said Sarah Cardell, the CMA’s head, said. “While we recognise and respect that the European Commission is entitled to take a different view, the CMA stands by its decision.”