E.U. Approves Microsoft’s $69 Billion Deal for Activision
Microsoft’s faltering $69 billion bid to buy the video game company Activision Blizzard received a glimmer of hope on Monday when European Union regulators approved what would be the largest consumer tech deal in two decades.
E.U. officials said they would allow the deal after Microsoft, the maker of the Xbox console, made concessions to ensure that rival companies of new online gaming services would have continued access to titles developed by Activision, such as the hugely popular Call of Duty.
Even so, the blockbuster acquisition, which has become a test of whether regulators around the world will approve a tech megamerger amid concerns about the industry’s power, still faces an uphill climb. American and British regulators have each moved to stop the acquisition in recent months, arguing that a combination of the Xbox maker with the company behind the Call of Duty franchise would hinder competition. Microsoft is fighting both actions.
The deal has revealed fractures among regulators about how to crimp the power of the world’s biggest technology companies.
Opposition to the acquisition has centered in part on so-called cloud gaming, a relatively new technology that lets people stream games on phones, tablets and other devices, potentially eliminating the need for hardware like consoles. American and British regulators said Microsoft’s purchase of Activision would undercut this still-developing sector of the gaming industry before it had a chance to bloom. The European Commission, the executive body for the 27-nation bloc, gave its approval after Microsoft agreed to guarantee for 10 years that gamers would be able to play Activision titles on cloud gaming services being developed by other companies, such as Nvidia.
After negotiating the concessions with Microsoft, European Union officials said they concluded that the deal could go through, particularly because the cloud gaming market was still so small. Many Activision titles that are not currently playable on smaller cloud gaming services would now be available, providing a consumer boost for the new technology, the regulators said.
“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,” the E.U. regulator said in a statement.
Microsoft said the concessions would benefit consumers.
“The European Commission has required Microsoft to license popular Activision Blizzard games automatically to competing cloud gaming services,” said Brad Smith, the president of Microsoft. “This will apply globally and will empower millions of consumers worldwide to play these games on any device they choose.”
The European Commission said the deal would not harm the console market because Microsoft would not have an incentive to deny rivals, such as the Sony PlayStation, access to Activision titles without sacrificing profit. In the European Union, PlayStation has a much larger market share than Xbox.
The deal shows the difficulty of reaching a global consensus to regulate an evolving technology industry. While policymakers on both sides of the Atlantic have expressed concern about the growing power of the tech industry, differences remain about when and how to intervene.
The approval on Monday is a rare occasion where European regulators appear to be more accommodating than the United States. For years, European antitrust regulators, under Margrethe Vestager, have aggressively gone after big tech companies such as Google, issuing billions of dollars of fines and ordering changes to certain business practices. An E.U. new law taking effect by next year will add further competition oversight of the biggest tech firms.
But in this instance it is the United States taking the tougher position. Lina Khan, the chair of the Federal Trade Commission, has made the challenging of mergers a central part of her plan to rein in the tech giants. The F.T.C. sued to block Microsoft’s purchase of Activision in December, arguing that the deal would harm consumers and lure gamers away from rivals. British regulators followed suit last month, rejecting the acquisition because of concerns about harming the cloud gaming market.
Sarah Cardell, the chief executive of Britain’s antitrust regulator, the Competition and Markets Authority, said the decision reached by the European Commission gives Microsoft too much power to set the terms and conditions for the cloud gaming market for the next decade.
“While we recognize and respect that the European Commission is entitled to take a different view, the C.M.A. stands by its decision,” Ms. Cardell said in a statement.
An F.T.C. spokesman declined to comment.
Approval in Brussels sets up a complicated legal chessboard for Microsoft and Activision, with few moves left to play. The fate of the deal will now hang largely on the legal process in the United States and Britain.
The two companies must show that the deal would not constrain competition, particularly if Microsoft would guarantee access to Activision titles. While American courts have shown they can be more open to overruling government antitrust initiatives, in Britain it is less common for verdicts by the Competition and Markets Authority to be reversed.
A loss in either country could be fatal for the deal because of the globalized and interconnected nature of the video game industry and the technology it uses.
