European Commission to Investigate Proposed Acquisition of Activision Blizzard by Microsoft
The European commission under the EU Merger Regulation has opened an in-depth investigation into the proposed acquisition of Activision Blizzard by Microsoft. This comes days after Xbox Chief Phil Spencer in a report said, “As long as there’s a PlayStation out there to ship to, our intent is that we continue to ship Call of Duty on PlayStation”.
The EU stated that they are concerned “that the proposed acquisition may reduce competition in the markets for the distribution of console and personal computers (‘PCs’) video games and for PC operating systems.”
“The Commission’s preliminary investigation shows that the transaction may significantly reduce competition on the markets for the distribution of console and PC video games, including multi-game subscription services and/or cloud game streaming services, and for PC operating systems.
“In particular, the Commission is concerned that, by acquiring Activision Blizzard, Microsoft may foreclose access to Activision Blizzard’s console and PC video games, especially to high-profile and highly successful games (so-called ‘AAA’ games) such as ‘Call of Duty’.”
The preliminary investigation suggests that Microsoft may have the ability, as well as a potential economic incentive, to engage in foreclosure strategies vis-à-vis Microsoft’s rival distributors of console video games, such as preventing these companies from distributing Activision Blizzard’s console video games on consoles or degrading the terms and conditions for their use of or access to these video games.
When it comes to multi-game subscription services and/or cloud game streaming services in particular, the Commission is concerned that, by acquiring Activision Blizzard, Microsoft may foreclose access, to the detriment of its rival distributors of console and PC video games that offer such services, to its own PC and console video games, which are key for the provision of the nascent services of multi-game subscription and cloud game streaming.”
“The preliminary investigation suggests that Microsoft may have the ability, as well as a potential economic incentive, to engage in such conduct vis-à-vis rival providers of PC operating systems.
The Commission will now carry out an in-depth investigation into the effects of the transaction to determine whether its initial competition concerns are confirmed.
The proposed transaction was notified to the Commission on 30 September 2022.
The Commission now has 90 working days, until 23 March 2023, to take a decision. The opening of an in-depth inquiry does not prejudge the outcome of the investigation.”
Microsoft in a statement, responded, “Sony, as the industry leader, says it is worried about Call of Duty, but we’ve said we are committed to making the same game available on the same day on both Xbox and PlayStation. We want people to have more access to games, not less.”
Microsoft said it expects to close the deal by fiscal year 2023, ending next June.