Europe explains the approval of the agreement between Microsoft and Activision Blizzard and the discrepancy with the CMA

The European Commission approved the purchase of Activision Blizzard by Microsoft with conditions, a decision that did not sit well with the CMA, the British regulator that a few weeks earlier had blocked that same operation. This discrepancy has been addressed by Margrethe Vestager, Competition Commissioner at the Commission, during a forum on European policy where his speech has dealt with merger control in the European Union.

Vestager argues that merger regulators should only block deals when really necessary. It is a “prospective exercise”, says the commissioner, which gives power to the authorities while forcing them to face a series of challenges. Not only must they predict the impact a purchase will have in the future, but they must also do so at the same time as other regulators whose mission it is to look out for the good of their own market. “Of course we cooperate, but sometimes there are disagreements,” says Vestager, who cites the operation between Microsoft and Activision Blizzard as an example.

Due to the divergence that has existed in this case, Vestager has considered it appropriate to take advantage of the forum to explain why Europe approves the purchase. The police station acknowledges that we are facing a “historic transaction in the video game industry”, a market that affects millions of consumers in Europe, so it “deserved an in-depth investigation” to analyze its impact on PC, console and mobile players. now and in the future. “We focus on the development of the cloud streamingwhich will play an increasingly important role in the way consumers access games,” explains Vestager.

During the investigation, the Commission found that Microsoft’s and Activision’s market share was ‘generally’ low in Europe, and that only when looking at specific segments such as shooter reached more than 20%. “And on consoles, Sony sells about four times as much PlayStation as Microsoft sells Xbox,” Vestager says. Given this context, they ruled out that the merger would pose a vertical problem. What’s more, it was determined that due to the popularity of Call of Duty, it is unlikely that Microsoft will “trigger in the foot” and stop selling this franchise on PlayStation. The CMA reached the same conclusion.

Europe did show its concern about cloud gaming, a market that is still in its infancy but will grow due to the “many advantages it offers players”, including greater accessibility and lower cost. This concern was shared with the CMA. The Commission was especially wary that Microsoft would make Activision Blizzard’s games exclusive to its own cloud gaming service, which would have restricted their access and strengthened Windows as an operating system.

To allay this concern, Microsoft proposed a concession: a free 10-year license to stream Activision Blizzard titles purchased by consumers through any cloud gaming service. “Where we disagreed with the CMA was on the concessions,” says Vestager. “Why did we do this instead of blocking the merger? For us, this concession completely addressed our concerns”, says the curator. “And on top of this, it has had significant pro-competitive effects.” One of them is that Activision Blizzard games will reach the cloud with a license for everyone.

Vestager maintains that the importance of this concession has been recognized by many of those affected, including developers, cloud game providers, distributors and also consumer associations. “This is because it unlocks the potential of the market in the cloud,” says the police station.

Looking ahead, Vestager affirms that we will experience a process of consolidation in traditional sectors, as well as mergers and acquisitions in emerging ones. “Our mission is to accompany this transition, […] find solutions that keep the game fair for all players, and work closely with the other agencies to achieve this. This is our Call of Duty”, concludes the curator.