European Commission Greenlights Activision Blizzard Acquisition: Cloud Gaming’s New Era

In a significant move shaping the gaming industry’s future, the European Commission gave a conditional green light today to Microsoft’s proposed acquisition of gaming giant Activision Blizzard. The approval, falling under the EU Merger Regulation, stipulates full adherence to the commitments offered by Microsoft.

Following an exhaustive investigation, the Commission’s decision reflects a thorough competitive landscape analysis and a comprehensive review of feedback from rivals, customers, game developers, distributors, and cloud gaming platforms across the EU.

The probe initially spotlighted possible competition concerns regarding the distribution of console and PC video games, including multi-game subscription services, cloud game streaming services, and the supply of PC operating systems. While it was concluded that Microsoft was unlikely to harm rival consoles and subscription services, the tech titan could potentially hamper competition in cloud game streaming and bolster its PC operating system market position.

Contrary to initial fears, the Commission found Microsoft has little incentive to withhold Activision’s games from Sony, the global console games frontrunner, especially given the PlayStation’s popularity in the European Economic Area (EEA). Even if Microsoft chose to do so, it would not significantly impact the console market competition. Sony’s size, extensive game catalog, and market standing would enable it to counter any attempt to weaken its position.

The acquisition, however, could create a dent in the burgeoning cloud game streaming sector. If Microsoft exclusively reserved Activision’s games for its cloud game streaming service, Game Pass Ultimate, and denied access to rival cloud game streaming platforms, it could stifle competition in the distribution of games via cloud game streaming.

Microsoft has offered comprehensive licensing commitments lasting 10 years to alleviate these competition concerns. These include free licenses allowing consumers in the EEA to stream current and future Activision Blizzard PC and console games via their preferred cloud game streaming services. Similarly, cloud game streaming service providers would also receive free licenses to stream Activision Blizzard’s games to EEA-based gamers.

These licenses represent a significant leap from current affairs, where Activision Blizzard neither licenses its games for cloud game streaming nor streams the games themselves. The commitments will allow millions of EEA gamers to stream Activision’s games using any cloud gaming services operating in the EEA, provided they purchased the games in an online store or they are included in an active multi-game subscription.

The approval, predicated on full compliance with the commitments, is poised to unlock substantial benefits for competition and consumers. It will extend Activision’s games to new platforms and devices, catalyzing cloud game streaming technology development in the EEA. The Commission will assign an independent trustee to oversee the implementation of these commitments, ensuring the vibrant future of cloud gaming in Europe.

Margrethe Vestager, Executive Vice-President in charge of competition policy, stated:

Video games attract billions of users all over the world. In such a fast-growing and dynamic industry, it is crucial to protect competition and innovation. Our decision represents an important step in this direction, by bringing Activision’s popular games to many more devices and consumers than before thanks to cloud game streaming. The commitments offered by Microsoft will enable for the first time the streaming of such games in any cloud game streaming services, enhancing competition and opportunities for growth.

Featured Image Credit: Photo / illustration by “Sam Pak” via Unsplash

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