June 15, 2024

Microsoft’s $69 billion bid to buy video game company Activision Blizzard received a glimmer of hope on Monday when European Union regulators approved what would be the largest consumer technology deal in 20 years.

EU officials said they would allow the deal after Xbox console maker Microsoft made concessions to ensure rivals to the new online gaming service could continue to use Activision-developed titles such as the popular Call of Duty .

Even so, the blockbuster acquisition still faces an uphill climb, and it has become a test of whether global regulators will approve a tech merger even as regulators around the world worry about the strength of the industry.Regulators in the U.S. and U.K. have each moved to block the takeover in recent months, citing the Xbox maker’s merger with the company behind it. The Call of Duty series would hinder competition. Microsoft is fighting both actions.

The deal reveals divisions among regulators over how to limit the power of the world’s largest technology companies.

Opposition to the acquisition has focused in part on so-called cloud gaming, a relatively new technology that allows people to stream games on phones, tablets and other devices, potentially eliminating the need for hardware such as game consoles. Regulators in the US and UK say Microsoft’s acquisition of Activision will cripple a still-growing industry before it can flourish. The European Commission, the governing body of the 27-nation bloc, approved the game after Microsoft agreed to guarantee that gamers will be able to play Activision games on cloud gaming services developed by other companies such as Nvidia for 10 years.

After negotiating the concessions with Microsoft, EU officials said they had concluded the deal could go through, especially since the cloud gaming market remains small. Many Activision games that are currently unplayable on smaller cloud gaming services are now available, giving the new technology a consumer boost, the regulator said.

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

These concessions will benefit consumers, Microsoft said.

“The European Commission has asked Microsoft to automatically license popular Activision Blizzard titles to competing cloud gaming services,” said Microsoft President Brad Smith. Play those games on whatever device they choose.”

The European Commission said the deal would not harm the console market because Microsoft would not have an incentive to deny access to Activision games to rivals such as Sony’s PlayStation without sacrificing profits. In the EU, PlayStation has a much larger market share than Xbox.

The deal underscores the difficulty of reaching a global consensus on regulating the growing tech industry. While policymakers on both sides of the Atlantic have expressed concern about the growing power of the tech sector, they remain divided on when and how to intervene.

Monday’s approval was a rare occasion in which European regulators appeared to be more accommodating than those in the United States. For years, under Margrethe Vestager, European antitrust regulators have aggressively gone after big tech companies like Google, imposing billions of dollars in fines and ordering changes to certain business practices. Behavior. New EU laws, due to come into force next year, will further strengthen competition oversight for big tech companies.

But in this case, the US has taken a tougher stance. Federal Trade Commission Chair Lina Khan has made challenging mergers a central part of her plan to rein in tech giants. The US Federal Trade Commission (FTC) sued in December to block Microsoft’s acquisition of Activision, saying the deal would harm consumers and lure gamers away from rivals. British regulators followed suit last month, rejecting the acquisition citing concerns about harming the cloud gaming market.

Sarah Caddell, chief executive of Britain’s antitrust watchdog Competition and Markets Authority, said the decision reached by the European Commission gave 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 CMA stands by its decision,” Ms Cadel said in a statement.

An FTC spokesman declined to comment.

The Brussels approval sets up a complex legal chessboard for Microsoft and Activision with few pieces to move. The fate of the deal will now depend largely on legal proceedings in the US and UK.

The companies will have to show that the deal won’t limit competition, especially if Microsoft guarantees access to Activision games.While U.S. courts have shown they can be more open to overruling government antitrust It is not uncommon for the Competition and Markets Authority’s rulings to be overturned in the UK.

Due to the global and interconnected nature of the video game industry and the technology it uses, the loss of any one country could prove fatal to the deal.

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