EU opens probe into Microsoft-Activision Blizzard merger deal

Brussels [Belgium], November 8 : The European Commission on Tuesday said that it 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 ('PCs') video games and for PC operating systems," the 27-member bloc said in a statement.
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 Commission's 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," the European Commission said.
In particular, the Commission is concerned that, by acquiring Activision Blizzard, Microsoft may foreclose access to Activision Blizzard's console and PC video games, especially to high-profile and highly successful games (so-called 'AAA' games) such as 'Call of Duty'.
According to the European Commission, the preliminary investigation suggests that Microsoft may have the ability, as well as a potential economic incentive, to engage in foreclosure strategies vis-a-vis Microsoft's rival distributors of console video games, such as preventing these companies from distributing Activision Blizzard's 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," the bloc said.
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, it added.
Finally, at this stage of the investigation, the Commission expressed 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 Microsoft's operating system Windows, by combining Activision Blizzard's games and Microsoft's distribution of games via cloud game streaming to Windows. This would discourage users to buy non-Windows PCs," the bloc said.
The preliminary investigation suggests that Microsoft may have the ability, as well as a potential economic incentive, to engage in such conduct vis-a-vis rival providers of PC operating systems.
The Commission said it 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," the commission said.