EU approves Microsoft’s $69 billion deal for Activision

Microsoft’s faltering $69 billion bid for video game company Activision Blizzard received a glimmer of hope Monday when European Union regulators approved what would be the biggest consumer technology deal in two decades.

EU officials said they would allow the deal after Microsoft, the maker of the Xbox console, made concessions to ensure rival companies for new online gaming services could still have access to titles developed by Activision, such as the hugely popular Call of Duty.

However, the massive acquisition, which has become a test of whether regulators around the world will approve the tech giant amid concerns about the strength of the industry, still faces an uphill climb. Both US and UK regulators have moved to halt the takeover in recent months, arguing that a combination of the Xbox maker and the company behind The Call of Duty franchise will hold back the competition. Microsoft is fighting both measures.

The deal exposed divisions among regulators over how to rein in the power of the world’s largest tech companies.

Opposition to the takeover has centered in part on so-called cloud gaming, a relatively new technology that allows people to stream games to phones, tablets and other devices, potentially eliminating the need for devices like consoles. US and UK regulators said Microsoft’s purchase of Activision would undermine this still-developing segment of the gaming industry before it had a chance to thrive. The European Commission, the 27-nation bloc’s executive body, gave its approval after Microsoft agreed to a 10-year guarantee that gamers could play Activision titles on cloud gaming services developed by other companies, such as Nvidia.

After negotiating the concessions with Microsoft, EU officials said they concluded a deal could go through, especially since the cloud gaming market was still very young. Many Activision titles that can’t currently be played on smaller cloud gaming services will now be available, regulators said, providing a consumer boost to the new technology.

“These commitments fully address the competition concerns identified by the Commission and represent a significant improvement in cloud game streaming compared to the current situation,” the EU regulator said in a statement.

Microsoft said the franchises would benefit consumers.

“The European Commission has required Microsoft to automatically license popular Activision Blizzard games to competing cloud gaming services,” said Brad Smith, Microsoft President. “This will be implemented globally and will enable millions of consumers around the world to play these games on any device of their choice.”

The European Commission said the deal would not hurt the console market because Microsoft would have no incentive to deny competitors, such as 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 the high-tech industry. While policymakers on both sides of the Atlantic have expressed concern about the tech industry’s growing power, disagreements remain over when and how to intervene.

Monday’s approval is a rare occasion where European regulators appear to be more accommodating than the US. For years, European antitrust regulators, under the leadership of Margrethe Vestager, have hounded big tech companies like Google, issuing billions of dollars in fines and ordering changes to certain business practices. A new EU law to take effect next year will add more competition oversight for the biggest tech companies.

But in this case, the United States is taking a tougher line. Lina Khan, chair of the Federal Trade Commission, has made challenging mergers a central part of her plan to rein in the tech giants. The Federal Trade Commission sued to block Microsoft’s purchase of Activision in December, arguing that the deal would harm consumers and lure gamers away from competitors. UK regulators followed suit last month, rejecting the acquisition over concerns about hurting the cloud gaming market.

Sarah Cardell, chief executive of Britain’s 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 the European Commission’s right to take a different view, the Capital Markets Authority stands by its decision,” Cardell said in a statement.

An FTC spokesperson declined to comment.

The approval in Brussels forms a complex legal chessboard for Microsoft and Activision, with few moves left to play. The fate of the deal will now depend largely on the legal process in the US and Britain.

The two companies must show that the deal will not restrict competition, especially if Microsoft will guarantee access to Activision’s titles. While US courts have shown they can be more open to government antitrust vetoes Initiatives In Britain it is not uncommon for rulings by the Competition and Markets Authority to be reversed.

Losing out in either country could be a deal-breaker due to the globalized and interconnected nature of the video game industry and the technology it uses.

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