Streaming commitments from Microsoft ensure positive decision from the European Union

It may have been a masterstroke

The regulatory body of the European Union officially announced on Monday, May 15, the approval of the deal between Microsoft and Activision Blizzard, which is expected to involve investments of approximately $69 billion.

According to Axios, the decision is significant for Xbox's "parent company" considering the importance of the bloc for business operations. Alongside the US Federal Trade Commission and the UK Competition and Markets Authority, the European Union is considered one of the three most important entities that Microsoft needs to convince to approve the deal.

In its announcement, the regulatory body stated that the positive decision is "subject to full compliance" with the commitments and partnerships that the Xbox manufacturer made regarding the cloud gaming market.

We have recently seen Microsoft entering into several of these agreements, including with Nware, EE, Boosteroid, and others. Microsoft will offer free licensing for streaming Activision Blizzard games, committing not to make the publisher's game catalog exclusive to Xbox.

In addition, it cannot charge any fees to block access to Activision Blizzard games on services that directly compete with its xCloud.

Although important, the approval from the European Union does not mean that the deal is finalized. In addition to trying to overturn the decision of the UK Competition and Markets Authority, the companies involved in the merger attempt will also have to face and overcome a legal process initiated by the US Federal Trade Commission, which seeks to completely block the acquisition.

The Competition and Markets Authority (CMA), which blocked the deal last month, released a response to the European Commission approving the deal.
 

Our response to the European Commission's announcement today on Microsoft/Activision ⬇

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— Competition & Markets Authority (@CMAgovUK) May 15, 2023

The UK, US and European competition authorities are unanimous that this merger would harm competition in cloud gaming. 

The CMA concluded that cloud gaming needs to continue as a free, competitive market to drive innovation and choice in this rapidly evolving sector.

Microsoft’s proposals, accepted by the European Commission today, would allow Microsoft to set the terms and conditions for this market for the next 10 years. 

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. 

This is one of the reasons the CMA’s independent panel group rejected Microsoft’s proposals and prevented this deal.

While we recognise and respect that the European Commission is entitled to take a different view, the CMA stands by its decision.

Microsoft plans to appeal the decision to the UK Competition Appeal Tribunal. The company has hired lawyer Daniel Beard KC, who has successfully defeated the EU regulator on several occasions.

The European Union regulator is the eighth confirmed entity to have approved the deal, following Ukraine, South Africa, Japan, Chile, Brazil, Saudi Arabia, and Serbia.