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In this article, we delve into the intricacies of Microsoft’s audacious $69 billion purchase of video game titan Activision Blizzard.
The deal recently won approval from the European Union but faces significant obstacles in the UK and US.
We explore the concerns, the competition, and the potential consequences of this monumental deal for the global gaming landscape.
Key Takeaways:
- The European Union approved Microsoft’s $69 billion acquisition of Activision Blizzard, finding no threat to competition in console gaming.
- UK regulators rejected the deal and the US is seeking to block it, adding significant hurdles to the acquisition’s completion.
- Microsoft’s commitment to license Activision games to cloud gaming platforms was crucial in the EU’s approval.
- Rival Sony remains a vocal opponent of the deal, which could result in Microsoft gaining control of significant franchises like “Call of Duty” and “World of Warcraft.”
- Microsoft’s proposed modifications to its licensing agreements aim to open up the emerging cloud gaming market.
- The licensing commitments have potential to expand the cloud gaming market by bringing Activision’s games to new platforms and devices.
- The EU approval might bolster Microsoft’s chances in the US, where the Federal Trade Commission is taking the company to court.
- The UK’s Competition and Markets Authority remains firm in its decision, arguing the deal could harm competition in the cloud gaming market.
- Microsoft and Activision Blizzard are appealing the UK decision, but historical precedents do not bode well.
The Green Light from the European Union
Microsoft’s audacious move to acquire Activision Blizzard has been given the thumbs up by the European Union.
This key milestone was achieved on Monday when the EU declared the $69 billion takeover would not throttle competition in the realm of popular console titles such as “Call of Duty.”
The 27-nation bloc’s executive arm, the European Commission, gave its blessing to the deal, finding merit in Microsoft’s proposed solutions to enhance competition in the nascent cloud gaming sector.
Resistance from the UK and the US
Despite this victory, the deal is teetering on the edge of collapse.
British regulators have poured cold water on it, and across the pond, U.S. authorities are pulling out all the stops to prevent it.
The future of this acquisition remains uncertain. Liam Deane, an industry analyst for tech research firm Omdia, notes that while the EU’s approval removes one significant obstacle, it does not necessarily put Microsoft in a more robust position to counter the UK’s rejection.
Microsoft’s Licensing Commitment: A Game Changer?
Microsoft sweetened the deal by promising to automatically license Activision games to cloud gaming platforms.
This commitment assuaged the European Commission’s concerns, which concluded that the deal would no longer pose a threat to competition and could, in fact, unlock substantial benefits for both competition and consumers.
The tech giant’s pledge appears to have been a game-changer, shifting the narrative of the deal in a positive direction.
Sony’s Opposition and the Impact on Console Gaming
Microsoft’s proposed acquisition has not been without its detractors.
Leading the charge is rival Sony, the creators of the PlayStation gaming system. Sony fears that the deal would grant Microsoft and its Xbox console control over Activision’s hit franchises, like “Call of Duty” and “World of Warcraft.”
Microsoft has attempted to counter this opposition by striking a deal with Nintendo to license Activision titles like “Call of Duty” for a decade, offering the same to Sony if the acquisition goes ahead.
The Future of Cloud Gaming with Microsoft’s Licensing Agreements
The burgeoning cloud gaming market has been under the microscope throughout this process.
Cloud gaming liberates players from the need to purchase costly consoles and gaming computers by enabling them to stream games they own to various devices via a cloud platform.
The European Commission gave its blessing to the deal after Microsoft agreed to modify its licensing agreements, permitting users and cloud gaming platforms to stream its titles royalty-free for a decade.
Microsoft’s President, Brad Smith, stated that these licenses would apply globally, potentially enabling millions of consumers worldwide to play these games on any device of their choice.
The Fallout in the UK: Microsoft’s Next Challenge
Despite gaining the EU’s approval, Microsoft now faces a significant challenge from the UK’s Competition and Markets Authority (CMA).
Last month, the CMA threw a spanner in the works by halting what could have been the largest tech deal in history. The CMA’s primary concern is the potential impact on the rapidly growing cloud gaming market.
Sarah Cardell, the authority’s chief executive, argued that the proposals accepted by the European Commission would allow Microsoft to dictate the market terms and conditions for the next decade, replacing a free, open, and competitive market with one subject to ongoing regulation.
The Long Road Ahead: Appealing the UK Decision
Microsoft and Activision Blizzard have chosen to tread the path of appealing against the UK decision.
This path, though fraught with challenges, is a necessary one if they hope to complete the historic acquisition.
In the past, the UK’s Competition and Markets Authority (CMA) has demonstrated its resolve to uphold competitive principles in the tech sector.
A notable example of this stance is when the CMA stalled Facebook parent company Meta’s attempt to purchase Giphy. The CMA expressed concerns that the acquisition could curb innovation and competition.
Despite Meta’s appeal, the regulatory body held firm, eventually forcing the social media behemoth to divest from the GIF-sharing platform.
This precedent does not bode well for Microsoft and Activision Blizzard. If their appeal falls flat, the tech giant would be left with two choices: to abandon the deal altogether or to exclude the UK as a distinct market.
Liam Deane, the gaming industry analyst, expressed doubts about the feasibility of the latter option.
Microsoft’s road ahead looks arduous. Yet, the outcome of this tussle will set a precedent for future tech acquisitions and potentially reshape the landscape of global cloud gaming.
Conclusion
Microsoft’s bold venture to acquire Activision Blizzard is an unfolding saga marked by global regulatory scrutiny, industry opposition, and the future of cloud gaming. It’s a high-stakes game with the potential to redefine the gaming industry’s landscape.
Despite the green light from the European Union, the resistance from the UK and the US adds significant twists to this tale.
Microsoft’s commitment to licensing and its impact on the burgeoning cloud gaming market present a new frontier in gaming.
Yet, this move is not without its detractors, as seen in Sony’s opposition.
The UK’s steadfast stance adds another layer of complexity, setting the stage for a challenging appeal process for Microsoft and Activision Blizzard.
As this narrative unfolds, the next few months promise to be crucial in shaping the future of this blockbuster deal and, by extension, the global gaming industry.
