The European Commission has approved, under the EU Merger Regulation, the proposed $68.7 billion acquisition of Activision Blizzard by Microsoft.
The approval is conditional on 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 as compared to the current situation.
The decision follows an in-depth investigation of the proposed acquisition of Activision by Microsoft. Both companies develop and publish games for PCs, consoles, and mobile devices and distribute games for PCs. Microsoft also distributes games for consoles and offers the Xbox console along with a wide range of products and services, including the PC operating system “Windows”. Activision’s games portfolio includes famous franchises such as Call of Duty, World of Warcraft, Overwatch and Diablo.
The Commission’s in-depth market investigation indicated that Microsoft would not be able to harm rival consoles and rival multi-game subscription services. At the same time, it confirmed that Microsoft could harm competition in the distribution of games via cloud game streaming services and that its position in the market for PC operating systems would be strengthened.
The EU commission stated that even if Microsoft did decide to withdraw Activision’s games from the PlayStation, this would not significantly harm competition in the consoles market. Even if Call of Duty is largely played on console, it is less popular in the EEA than in other regions of the world, and is less popular in the EEA within its genre compared to other markets. Therefore, even without being able to offer this specific game, Sony could leverage its size, extensive games catalogue and market position to fend off any attempt to weaken its competitive position.
Cloud game streaming, while still nascent, represents a growing industry trend, with increasing availability of streaming platforms, also EU-based. Thanks to this technology, games can run in remote servers and do not need to be installed in the gamers’ end devices. Therefore, cloud game streaming allows gamers to stream games and play them on any device of their choice, even on devices that would not normally support the game. Despite its potential, cloud game streaming still represents a very limited part of the overall market for the distribution of games today, accounting only for around 1% of the total worldwide market in 2022. To unleash its potential, cloud game streaming will require broader game catalogues and high-speed internet.