The only concerned party is the market leader with 2x market share.
https://twitter.com/innthacut/status/1590006131698831366?s=46&t=ZjIuL3NI2p69moKDZhdWkg
https://twitter.com/klobrille/status/1590010950023016453?s=46&t=ZjIuL3NI2p69moKDZhdWkg
The European Commission has opened an in-depth investigation to assess the proposed acquisition of Activision Blizzard by Microsoft under the EU Merger Regulation. The Commission is concerned that the proposed acquisition may reduce competition in the markets for the distribution of console and personal computers (âPCsâ) video games and for PC operating systems.
Microsoft and Activision Blizzard are both developers and publishers of games for PCs, game consoles and mobile devices as well as distributors of games for PCs. In addition, Microsoft also distributes games for consoles, offers the Xbox gaming console and related services as well a wide range of products and services, including the PC operating system Windows and the cloud computing service Azure.
The Commissionâs preliminary competition concerns
The Commissionâs 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 Blizzardâs console and PC video games, especially to high-profile and highly successful games (so-called âAAAâ games) such as âCall of Dutyâ.
The preliminary investigation suggests that Microsoft may have the ability, as well as a potential economic incentive, to engage in foreclosure strategies vis-Ă -vis Microsoftâs rival distributors of console video games, such as preventing these companies from distributing Activision Blizzardâs 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.
Such foreclosure strategies could reduce competition in the markets for the distribution of console and PC video games, leading to higher prices, lower quality and less innovation for console game distributors, which may in turn be passed on to consumers.
Finally, at this stage of the investigation, the Commission has concerns that the proposed acquisition may reduce competition on the market for PC operating systems. In particular, the Commission is concerned that Microsoft may reduce the ability of rival providers of PC operating systems to compete with Microsoftâs operating system Windows, by combining Activision Blizzardâs games and Microsoftâs distribution of games via cloud game streaming to Windows. This would discourage users to buy non-Windows PCs.
The preliminary investigation suggests that Microsoft may have the ability, as well as a potential economic incentive, to engage in such conduct vis-Ă -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.
Companies and products
Microsoft is a global technology company headquartered in Redmond, Washington, US. Microsoft offers a wide range of products and services to customers through the following operating segments: (i) Productivity and Business Processes; (ii) Intelligent Cloud; and (iii) More Personal Computing. Microsoft is active as a developer and publisher of games for PCs, game consoles and mobile devices as well as a distributor of games for PCs and consoles. In addition, Microsoft offers the Xbox gaming console and related services.
Activision Blizzard is a publicly listed company headquartered in Santa Monica, California, US. Activision Blizzard is active as a developer and publisher of games for PCs, game consoles and mobile devices as well as a distributor of games for PCs.
Merger control and procedure
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.
The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).
In addition to the current transaction, there are currently four on-going Phase II merger investigations: (i) the proposed acquisition of Pfleiderer Polska by Kronospan; (ii) the proposed acquisition of OMV Slovenija by MOL; (iii) the proposed acquisition of VOO and Brutélé by Orange; and (iv) the proposed acquisition of Alumetal by Hydro.
More information will be available on the Commissionâs competition website, in the Commissionâs public case register under the case number M.10646.
Expected but annoyed nonetheless.
They are concerned
So basically nothing new. We will have to wait till spring.
But Microsoft will 100% retailiate against Sony as those concerns are certainly came from Sony.
Then the only interesting decision is from FTC at the end of the month. And probably new Hoegâs video is coming.
Yeah no need to panic like most people do everytime this happens haha, all this is them just saying we want to look into it and here is why. They have to give reasons why and they will mull over them more with Microsoft and make deals with them and so on. I think people do tend to lean on the word concern a lot as if it has a lot of weight but they are concerned about all mergers like this, itâs not like this deal in particular is concerning.
This is as close to a legit argument as it could get. And an easy answer is: nothingâs gonna change, Windows has a gaming dominance already and if anything, ABK games available on Cloud means they could be played on Mac and Linux where they havenât been natively supported in a long time, if ever.
It is a dumb arguement, you donât even need a windows device to play those games lol. You could be a iOS gamer only and still play COD for example. If anything Microsoft is making it so you donât need any particular device and anything should do unless someone blocks it.
Looks like Iâm not getting my diablo 4 launching on gamepass dream
There is no need to bring any arguments there because COD did not come to other operating systems in the first place
So essentially this EU decisioon is nothingburger.
Yupp, this is the only argument that they could make and legitimately cancel the deal. Much better legal argument than anything the CMA put forth.
If the EC is hung up on this, theres not a concession that Microsoft can realistically make. It also sets a precedent for them that essentially limits their ability to grow via another big acquisition.
At least for another several months we will still talk about ABK deal
They could find an argument that Apple for example wonât be able to try to partner with ABK to bring their games to Mac and establish that OS in the gaming market if they wanted. But Apple donât seem bothered with the acquisition anyway lol
Exactly. And they can always bring the example that Windows games run just fine on Steam Deck that uses a different OS. Anyway it seems like EU is more in line with CADE then CMA.
The mention about concern for the competition in the console space is amusing because trust me, Xbox is a very distant 3rd in the EU and in some countries it is almost non existent.
It was 100% fed by Sony complaints where Xbox suddenly gained very strong position in the market while some european countries have Sony at 70%+. Anyway EUâs decision does except we will have to wait.
I honestly think this could fall either side now. It is infuriating how regulators have absolutely no idea about the state of the gaming industry and how they are scared to death by the big amount.
Thats the fault of Apple! Theyâre the ones who would be preventing xCloud on their non-Windows PCs and other devices.
The amount of hand wringing that goes on over this is always a bit surprising. This was always what was going to happen. Microsoft didnât estimate fiscal year 2023 for fun. They knew exactly what the process was going to be.
Notice how every concern is generally preceded with the word âmayâ. This deal âmay do thisâ or âmay do thatâ. As has been repeated by Hoeg since the jump, MS makes public statements about the things they would be willing to accept but arenât going to just offer them up front, they will go through the process and concede them if they have to. Additionally they will attempt to align any/all concessions across jurisdictions to keep operations as similar as possible everywhere they operate.
The deal is going to pass, the worst case scenario is they put the things they have publicly stated into writing. It will just happen sometime next spring.