On Monday, European regulators granted approval to Microsoft's proposed acquisition of Activision Blizzard, a deal worth $69 billion. While this decision does not guarantee the acquisition's completion, it may assist Microsoft in addressing objections raised by the United States and the United Kingdom.

The European Commission's approval comes shortly after British regulators rejected the purchase. According to the European Commission, Microsoft has committed to a 10-year licensing agreement that enables European consumers to access all existing and future Activision games through any cloud-gaming service of their choice.

Margrethe Vestager, the EU Commission's head of competition policy, emphasised the importance of safeguarding competition and innovation in the rapidly growing and dynamic gaming industry. She stated that the decision represents a significant step in this direction, as it allows Activision's popular games to reach a broader audience across various devices through cloud game streaming.

Despite the setback in the UK, Microsoft intends to appeal the decision and can potentially benefit from the European regulators' green light. Activision Blizzard CEO Bobby Kotick acknowledged the thorough and comprehensive process conducted by the European Commission, resulting in the merger's approval. However, stringent measures were imposed to ensure robust competition within the rapidly expanding industry.

Microsoft's vice chair and president, Brad Smith, highlighted that the European Commission's requirements oblige Microsoft to automatically license popular Activision Blizzard games to competing cloud gaming services worldwide. This move aims to empower millions of consumers globally, allowing them to play these games on their preferred devices.

EU regulators were persuaded by Microsoft's commitments to license Activision content to competitors in the cloud-gaming sector. In contrast, British regulators argued that Microsoft's proposals were too limited and insufficient in preserving competition.

The UK Competition and Markets Authority (CMA) expressed its divergence from the European Commission's decision, emphasising their concerns about the future of the cloud gaming market and the effectiveness of behavioural commitments proposed by the involved parties. The CMA stands by its decision to block the deal.

In response to the EU announcement, the Federal Trade Commission in the United States also seeks to impede the acquisition, citing similar competition concerns as those raised by the UK authorities.

The proposed acquisition price stands at $95 per share.

References:
www.barrons.com