Microsoft’s$68.7 billion dealto acquire Activision Blizzard has been approved by EU regulators just weeks after UK regulators blocked the acquisition. The European Commission has concluded that the deal can pass thanks to commitments from Microsoft related to cloud gaming.
The EU found that Microsoft “would have no incentive to refuse to distribute Activision’s games to Sony” and that “even if Microsoft did decide to withdraw Activision’s games from the PlayStation, this would not significantly harm competition in the consoles market.” But EU regulators, much like the UK, did find the acquisition could harm competition around the distribution of PC and console games through cloud gaming services.
The European Commission has identified remedies to allow for the deal to go ahead through 10-year licensing deals that Microsoft has offered to competitors. These include a free license to consumers in EU countries that would allow them to stream via “any cloud game streaming services of their choice” all current and future Activision Blizzard PC and console games that they have a license for. Cloud providers will also be offered a free license to stream these games in EU markets.
These licenses are automatic and mean that consumers will have a right to stream Activision Blizzard games they’ve purchased or subscribe to on “any cloud game streaming service of their choice and play them on any device using any operating system.” It appears that the European Commission requested Microsoft offer this automatic license, and the Xbox maker will now apply this globally.
“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,” says Margrethe Vestager, executive VP in charge of competition policy at the European Commission. “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.”
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The EU’s decision to approve this giant deal comes less than a month after UK regulators blocked Microsoft’s plans. The UK’s Competition and Markets Authority (CMA) blocked the deal over cloud gaming market concerns, stating that the acquisition could lead to “reduced innovation and less choice for UK gamers over the years to come.” Microsoft is appealing the decision.
Microsoft has spent the past few months trying to address regulators’ concerns around cloud gaming, with the deals convincing EU regulators but not the UK. The software giant signedcloud gaming dealswith Boosteroid, Ubitus, and Nvidia to allow Xbox PC games to run on these rival cloud gaming services. A similar deal with Nintendo was announced in December. All of these 10-year deals also include access toCall of Dutyand other Activision Blizzard games if the deal is approved by regulators.
The CMA fears that Microsoft controlling Call of Duty,Overwatch, andWorld of Warcraft would give it a big advantage over competitors in the cloud gaming market — which the regulator estimates Microsoft has around 60 to 70 percent of global cloud gaming services share.
Microsoft’s appeal in the UK will likely take months before the process is complete. Today’s EU decision may help boost Microsoft’s chances of getting this giant deal over the line, but the company still faces battles in the US and UK. Regulators in Saudi Arabia, Brazil, Chile, Serbia, Japan, and South Africa have also all approved the deal. China, South Korea, New Zealand, and Australia are all still reviewing the deal.
Microsoft’s next big hurdle is regulatory scrutiny closer to home. The Federal Trade Commission sued to block Microsoft and Activision Blizzard’s deal late last year, and the case is still at the document discovery stage. An evidentiary hearing is now scheduled for August 2nd, so we’re still months away from knowing the outcome of the case.
While Activision Blizzard CEO Bobby Kotick welcomed the EU approval and says the company intends “to meaningfully expand our investment and workforce throughout the EU,” the CMA defended its own position.
“The UK, US and European competition authorities are unanimous that this merger would harm competition in cloud gaming,” says the CMA in a statement. “Microsoft’s proposals, accepted by the European Commission today, would allow Microsoft to set the terms and conditions for this market for the next 10 years. They would replace a free, open and competitive market with one subject to ongoing regulation of the games Microsoft sells, the platforms to which it sells them, and the conditions of sale. This is one of the reasons the CMA’s independent panel group rejected Microsoft’s proposals and prevented this deal. While we recognize and respect that the European Commission is entitled to take a different view, the CMA stands by its decision.”
Microsoft clearly has a tough appeal battle ahead with the CMA, even if the software maker was able to offer a concession to the EU to get the deal over the line in Europe today.
Update, May 15th 11:07AM ET: Article updated with comment from Microsoft.
Update, May 15th 11:30AM ET: Article updated with comment from the CMA.
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FAQs
European Union regulators on Monday approved Microsoft's proposed $69 billion acquisition of gaming firm Activision Blizzard. The European Commission, the EU's executive arm, said that Microsoft offered remedies in the nascent area of cloud gaming that have staved off antitrust concerns.
Has the Microsoft Activision deal been approved? ›
More than 20 months after agreeing to the company's largest purchase ever, Microsoft has closed its acquisition of Activision Blizzard. The deal was put through a hefty regulatory review and has finally gained a favorable ruling from a U.S. district judge.
Did the Activision Blizzard acquisition go through? ›
He has been covering the business & culture of video games for two decades. Microsoft has successfully persuaded regulators around the world to clear its $68.7 billion acquisition of Activision Blizzard — the biggest deal of its kind the gaming industry has ever seen — and has completed the deal.
How many countries have approved the Microsoft Activision deal? ›
Where has the merger been approved? The Microsoft-Activision Blizzard merger has now been approved in key markets around the world. As of October 13th, these include the UK, European Union, Ukraine, Saudi Arabia, Brazil, Serbia, Chile, Japan, South Africa, South Korea, New Zealand and China.
Was the Microsoft Activision deal blocked? ›
The regulator initially tried to block the deal, saying it would undercut competition, but reversed course after Microsoft agreed not to buy a part of Activision's business associated with so-called cloud gaming, a small but promising new area for the industry.
Who won the Microsoft Activision deal? ›
NEW YORK — Microsoft has completed its acquisition of video game-maker Activision Blizzard for $69 billion, closing one of the most expensive tech acquisitions in history that could have repercussions across the video game industry.
Is Activision deal final? ›
The companies agreed to extend the close of the acquisition until October 18, 2023, as to resolve the CMA issue. Following the CMA's approval of the revised terms on October 13, 2023, Microsoft completed the acquisition of Activision Blizzard the same day.
Who owns most of Activision Blizzard? ›
At the conclusion of the deal, Vivendi was no longer Activision Blizzard's parent company, and Activision Blizzard became an independent company as a majority of the shares became owned by the public. Bobby Kotick and Brian Kelly retained a 24.4% stake in the company overall.
What happens to Activision stock after acquisition? ›
Following closing, all Activision Blizzard employee shareholders will be treated the same as other shareholders and receive $95.00 for each share of Activision Blizzard stock that they own.
What happens if Xbox buys Activision? ›
From a development perspective, the acquisition has the potential to prevent indie games from being made. It's likely Microsoft would focus its budget on pushing in-house content into its Game Pass service rather than giving smaller indie studios the budget to develop their own games for Xbox, Ward says.
Lawsuit. Judge Jacqueline Scott Corley oversaw FTC v. Microsoft. On December 8, 2022, the FTC voted to file a legal challenge to block Microsoft's acquisition of Activision Blizzard.
Is Microsoft buying Activision a good thing? ›
What Microsoft Gains With Activision. As Singh put it, in one shot, the Activision purchase enables Microsoft to shorten time-to-market with new gaming products, expand its reach, and deepen its penetration in those markets.
Did Microsoft pay cash for Activision? ›
Microsoft will acquire Activision Blizzard for $95.00 per share, in an all-cash transaction valued at $68.7 billion, inclusive of Activision Blizzard's net cash. When the transaction closes, Microsoft will become the world's third-largest gaming company by revenue, behind Tencent and Sony.
Why can't Microsoft just buy Activision? ›
The reason the purchase was bogged down by legal action is competition. By acquiring Activision Blizzard, critics argued, Microsoft's gaming division would simply own too much of the industry, unfairly limiting its competitors and ultimately harming consumers.
What is the status of the Microsoft acquisition of Activision? ›
After a wait of nearly two years since its initial announcement of the deal, Microsoft finally acquired Activision Blizzard for $68.7 billion on October 13, 2023 after receiving a nod from the U.K. regulators.
Can the CMA block Activision merger? ›
The CMA has prevented Microsoft's proposed purchase of Activision over concerns the deal would alter the future of the fast-growing cloud gaming market, leading to reduced innovation and less choice for UK gamers over the years to come.
Is Microsoft paying cash for Activision? ›
In a somewhat unusual manner for such a large acquisition, Microsoft purchased Activision in an all-cash deal. With around $111 billion of cash on hand as of the most recent quarterly report, the deal to purchase Activision represented a large buy even for a tech giant like Microsoft.
Did the UK approve the Microsoft Activision deal? ›
Microsoft's $69 billion Activision Blizzard takeover approved by UK, clearing way for deal to close.
What is the CMA decision on Microsoft? ›
Microsoft Corporation's request for consent to close under the Microsoft and Activision Merger Inquiry Order 2023 granted. 13 October 2023: The CMA has decided to grant consent for Microsoft Corporation to acquire Activision Blizzard, Inc. (excluding Activision Blizzard, Inc.'s non-EEA cloud streaming rights).
How much did ATVI buyout for? ›
Microsoft (MSFT) on Friday finalized its $69 billion purchase of "Call of Duty" maker Activision Blizzard (ATVI), according to a regulatory filing from the company Friday, in what is the largest-ever merger for the gaming market.