Microsoft’s acquisition of Activision Blizzard received permission from the European Commission, the executive branch of the EU. This choice was made in light of Microsoft’s proposed solutions, particularly in the new field of cloud gaming. Regulators were worried that Activision games might only be available on Microsoft’s platforms, which would result in significant competitive distortions in the console and cloud gaming markets. Microsoft provided solutions focusing on enabling customers to stream Activision games they buy on any cloud streaming platform to calm these concerns. This effort guarantees that customers have the freedom to play the games they buy on the cloud gaming platform of their choice.
The gaming industry’s emerging cloud gaming sector has the potential to completely change how games are played and accessible. Cloud gaming reduces the need for specialized gear like consoles by streaming games from servers, allowing consumers to play games on already-owned gadgets like TVs, cellphones, and computers. Microsoft has incorporated cloud gaming as a key component of its future strategy after realizing its relevance. Microsoft wants to use cloud gaming as an important differentiation even though Sony’s PlayStation 5 and Nintendo Switch are tough competitors in the console industry.
The gaming company at the core of this deal, Activision Blizzard, is home to some of the most recognizable names in the gaming industry, such as the hugely successful Call of Duty series and World of Warcraft. Microsoft is interested in Activision Blizzard because it wants to improve its portfolio of cloud games, which will draw and keep more players. Microsoft wants to improve its position in the cloud gaming business by offering an extensive range of games that can be downloaded on a subscription basis, much like Netflix.
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Cloud gaming and its effects on competition were heavily scrutinized throughout the EU Commission’s study. Microsoft’s projected domination in cloud gaming before the technology is fully developed has drawn criticism. The EU determined that if Microsoft made these games exclusive to its platform, it would hurt competition in the distribution of PC and console games via cloud gaming services. However, Microsoft’s suggested fixes were thought to be enough. Those who buy or have already bought an Activision game will be able to stream these games on any cloud gaming service of their choice. Additionally, Microsoft will grant royalty-free licenses to cloud gaming services, guaranteeing that Activision games are more widely available.
Microsoft continues to encounter opposition from other regulators and business rivals despite the EU’s approval. The transaction was previously banned by the UK’s Competition and Markets Authority (CMA), which cited worries about diminished competitiveness in the cloud gaming industry. Microsoft provided comparable measures to the EU and the UK, but the CMA found that they were unsatisfactory. The purchase is under scrutiny by the U.S. Federal Trade Commission (FTC), and Microsoft must prove to the FTC and competitors, notably Sony, that the acquisition won’t hurt competition. The ongoing FTC action and the requirement to obtain additional approvals show the challenges Microsoft is still facing.
