Reason why Microsoft’s Activision deal will be approved by EU regulators

Mar 2, 2023

Microsoft announced in January 2023 that it would acquire Activision Blizzard, one of the world’s largest video game publishers, for $68.7 billion. The deal would make Microsoft the owner of popular franchises such as Call of Duty, Warcraft, Overwatch, and Candy Crush. However, such a massive deal also raised concerns about its impact on competition and consumer choice in the gaming industry.

The deal is subject to regulatory approval from various authorities around the world, including the European Union (EU). The EU has been known to be strict when it comes to antitrust issues, especially in the tech sector. For example, it fined Google billions of euros for abusing its dominance in online advertising and search engines. It also blocked mergers between Siemens and Alstom in 2019 and between UPS and TNT Express in 2013.

However, according to a recent report by Reuters, Microsoft’s Activision deal is likely to be approved by EU regulators without any major concessions or remedies. The report cites sources familiar with the matter who say that Microsoft has already taken steps to address potential competition concerns by striking licensing deals with Nintendo and Nvidia.

The licensing deals allow Nintendo and Nvidia to use some of Microsoft’s gaming technology and content on their platforms. For example, Nintendo can offer Xbox Game Pass subscriptions on its Switch console, while Nvidia can stream Xbox games on its GeForce Now service. These deals show that Microsoft is willing to share its gaming assets with other players in the market and not lock them behind its own ecosystem.

The report also suggests that EU regulators are not convinced that Activision’s games are essential for Microsoft’s rivals to compete effectively. Activision’s games are mostly played on consoles or PCs, while other gaming platforms such as mobile devices or cloud services have different audiences and offerings. Moreover, Activision faces competition from other game publishers such as Electronic Arts (EA), Ubisoft, Take-Two Interactive, Sony Interactive Entertainment (SIE), and Tencent.

Therefore, EU regulators are likely to conclude that Microsoft’s Activision deal does not pose a significant threat to competition or consumer choice in the gaming industry. The deal is expected to be cleared by April 25, which is the deadline set by the European Commission after extending it by 10 working days. However, there are still some hurdles before the deal can be finalized, such as obtaining approval from other jurisdictions such as China or facing possible legal challenges from competitors or consumer groups.

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