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The European Union has approved Microsoft’s blockbuster $68.7 billion buyout of Activision Blizzard, and one of the key people involved in the decision, Margrethe Vestager, has now shed more light on the decision.
In a speech recently, Vestager spoke about the divergence of opinion between the EU and the UK, the latter of which blocked the deal over concerns about cloud gaming.
“No one doubts that this was a landmark transaction in the gaming industry. Gaming is a dynamic market that impacts millions of consumers in Europe. So the deal deserved a thorough investigation. We looked at impacts on gamers today and in the future–whether they play on PC, console, or on their phones. We focused on the development of cloud streaming, which will play an increasing role in how consumers access games,” Vestager said.
She went on to say that the overall market share for Microsoft and Activision Blizzard was “generally low” in Europe compared to the rest of the world. Vestager went on to say that Sony dominates the market for console sales in the EU, selling about four times more PlayStation units than Microsoft does for Xbox consoles.
Like the CMA, Vestager said the EU did not have a concern that Microsoft would make Call of Duty exclusive to Xbox. Microsoft has said this would be a disastrous decision considering how much money Call of Duty makes on PlayStation.
The EU did have concerns about the cloud gaming space, a market that is “still nascent,” Vestager said, but has the potential to grow in the future. “Cloud gaming deserved an in-depth assessment. This was a common concern because, like us, the CMA focused on this market,” Vestager said.
She went on to say that the EU had concerns that Microsoft might make Activision Blizzard games exclusive to its own cloud gaming service. However, Vestager said Microsoft’s 10-year deals with other cloud streaming providers outside of Microsoft’s helped the EU get on board and approve the deal.
“And why did we do this instead of blocking the merger? Well, to us, this solution fully addressed our concerns. And on top of that, it had significant procompetitive effects,” she said.
This actually is better for competition, not worse, Vestager said. It means that smaller cloud service providers could jump into the market and compete, “widening choice for gamers,” she said.
“The merits of this remedy was recognized across the spectrum–by developers, by cloud gaming providers, by distributors and of course also by consumer groups. And that is because it unlocked the potential of the cloud market,” she said.
Vestager went on to say that the EU worked with competition commissions from the UK, Canada, US, Australia, and New Zealand for the Microsoft-Activision Blizzard deal. The UK’s decision to block the deal, then, makes for an “interesting” situation, Vestager said.
Vestager wrapped up her speech by saying that “disruption has become the norm” in the business market for mergers and acquisitions. She said due to how there have been many changes to how people shop, work, relax, and socialize, one can expect there to be even more consolidation in the time to come.
“Our mission is to accompany that transition, one merger at a time. It is to find solutions that keep the game fair for all players, and working closely together with sister agencies as we do so,” she said. “That is our Call of Duty.”
Microsoft’s deal to buy Activision Blizzard has been approved in 37 countries, but in addition to the UK, the United States has yet to give the green light. The Federal Trade Commission in the US will conduct a hearing in early August 2023 to discuss the sale.
The $68.7 billion that Microsoft is proposing to pay for Activision Blizzard represents the biggest-ever acquisition in gaming history and among the largest in any business. Microsoft’s biggest acquisition ever was LinkedIn, which it acquired in 2016 for $26.2 billion. The Activision Blizzard deal is 2.5x bigger than that.
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