BRUSSELS — Microsoft on Monday won European Union approval for a $69 billion gaming deal that the United Kingdom has already vetoed.
Competition Commissioner Margrethe Vestager said Microsoft’s offer to license Activision Blizzard’s games for cloud gaming for the first time would “kickstart the market.” The European Commission and the U.K.’s Competition and Markets Authority (CMA) had a “difference in the assessment of what will happen in cloud gaming,” she said, with the U.K. seeing Microsoft’s share of cloud gaming growing far faster.
“We don’t see everything the same way as other jurisdictions,” she told reporters at a briefing Monday. “We’ve been working very closely with the CMA and with colleagues” from the U.S. antitrust authorities and “we will sometimes come to diverging conclusions … this will happen once in a while.”
The U.K. merger watchdog blocked the deal in April because it said the agreement would “alter the future of the fast-growing cloud gaming market.” Microsoft is appealing the decision in the U.K. courts. The U.S. Federal Trade Commission last year sued to block the deal and will need a court to confirm a veto.
Vestager said the gaming market in Europe also differs from the U.S. in the type of games people play.
“No pun intended, but the shooter games are much more popular in the U.S. Here it’s much more FIFA” or football that people play, she said. “In other jurisdictions, the market shares are higher than what you would find here.”
The software giant’s takeover of games developer Activision marks the highest price ever paid for a tech company and would allow Microsoft to add hit games such as “Call of Duty” and “World of Warcraft” to its software empire.
The company’s offer to license games for 10 years to rival gaming platforms will “significantly improve the conditions for cloud game streaming compared to the present,” Vestager said. “It’s a very simple remedy.”
“We fully own our decision. We really do think that it is pro-competitive,” she said. “I think the CMA will have to defend their decision.
“We agree that the cloud streaming market is a promising market. We may disagree about the speed at which it will develop,” she said. “We have no doubts that cloud streaming will be the thing. And this is also why we are so enthusiastic about this remedy because that will make so many games available for many more people.”
CMA Chief Executive Sarah Cardell said in a statement that the regulator stood by its decision from April, arguing the deal Microsoft reached with the Europeans today would “allow Microsoft to set the terms and conditions” in the cloud gaming market for the next decade.
“They would replace a free, open and competitive market with one subject to ongoing regulation of the games Microsoft sells, the platforms to which it sells them, and the conditions of sale,” she said.
The Commission said cloud gaming is still very limited, at around 1 percent of the total worldwide market in 2022, requiring broader game catalogs and high-speed internet in order to take off. Microsoft and Activision’s share of the gaming market for personal computers and consoles is far behind Sony’s 80 percent market share, it said.
EU officials found that Microsoft had no incentive to refuse to distribute Activision games to Sony worldwide, including in Europe, where there are four Sony PlayStation consoles for every Microsoft Xbox. And any decision to withdraw the games from PlayStation wouldn’t significantly harm competition because “Call of Duty” is less popular in Europe compared with other markets. Sony, in any case, could leverage its power “to fend off any attempt to weaken its competitive position.”
Microsoft President Brad Smith said the Commission had now required it to license Activision games “automatically to competing cloud gaming services,” an offer that “will apply globally” and allow people to play games on any device.
Activision Chief Executive Bobby Kotick greeted the EU approval by saying the company intended “to meaningfully expand our investment and workforce throughout Europe.”
The EU executive said it tested Microsoft’s licensing offer with industry players twice and had positive feedback that other platforms would take up the licenses. Microsoft’s offer will be supervised by a monitoring trustee and the company risks fines if it breaches its pledge.
This article has been updated with comment from the Competition and Markets Authority, Microsoft and Activision.
