March 23, 2023
European Commission to investigate $68.7 billion Microsoft-Activision merger

European Commission to investigate $68.7 billion Microsoft-Activision merger

Microsoft’s efforts to close their merger deal with Activision Blizzard will come under scrutiny from the European Commission, the executive arm of the European Union, on antitrust matters. The rapprochement between the two giants was to last for some time Huge $68.7 billion payout from Microsoftbut EU apprehension about how this affects competition in the PC and console gaming market has been a persistent roadblock for Microsoft.

Microsoft’s big push for this deal is a straight play to compete with gaming industry giants Tencent and Sony. The latter has publicly stated that this could affect fair competition in the market, especially when it comes to flagship Activision Blizzard games like Overwatch and Call of Duty – as the company behind XBox and Gamepass, Microsoft would technically be in a privileged position. to make games like Call of Duty exclusive to their own platforms and consoles, in addition to having direct control over the titles.

Responding to Sony’s concerns, Microsoft said in a statement in October that it was “committed” to making Call of Duty available “same day” on both XBox and Playstation. But with the magnitude of the effects that could potentially result from Microsoft’s breach of such a covenant, neither Sony nor the EU are satisfied.

Image credit: MarketWatch

Microsoft says deal focuses on mobile games

Microsoft has always maintained its position that no Activision title will be put out of reach of its competitors. In a statement in September, Microsoft said in a statement that they would “pursue a principled path” and not disqualify players where they currently play games like Call of Duty. They also said cross-platform services won’t go away, citing the 2014 deal to acquire Mojang, creator of the ubiquitous Minecraft title.

In the same statement, Microsoft also pointed out that they were primarily pursuing this merger because of Activision’s capabilities as a mobile game developer, suggesting that the PC and console gaming sectors were not necessarily their primary targets. with this agreement. They added that they were confident that the details of this agreement would reveal that it was in the best interests of the industry as a whole.

Microsoft misses Commission appeals deadline

The operation aimed at carrying out this merger was notified to the authorities in September, following which a preliminary investigation was opened. At this point, the UK’s antitrust watchdog Competition and Markets Authority also took note of the transaction and said a merger could lead to a “substantial lessening” of competition in the UK.

Shortly after, EU flagged similar concerns and sought solutions from Microsoft regarding its proposed bid. The deadline for Microsoft to submit these solutions was October 31, and the tech giant missed it, leading to what will now be further investigation into the deal.

“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 distributing Activision Blizzard’s console video games on consoles or degrading the terms of use or access to such video games,” reads a statement from the European Commission.

In general, it is understood that companies do not submit corrective measures during the first stage of the review, as this would open up a months-long investigation very early in the transactions. In this case, as the EU opens phase 2 of its investigation, the failure to submit seems to be a decision by Microsoft to save more time. The European Commission will issue its decision on March 23, 2023.

As it stands, the UK is also looking at this deal, and the same is expected from at least some of the markets that will have to approve the deal – Australia, New Zealand, Japan and South Korea are major names on this front. .

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