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EU says benefits of Microsoft-Activision deal were recognised by devs, consumers and cloud providers

Shortly after the European Commission announced its decision to approve Microsoft's acquisition of Activision Blizzard, the CMA took to Twitter to outline the reasons it disagrees with the decision and is moving ahead with its decision to block. Now today, the EU has put out a lengthy statement on its approach to mergers, promoting Microsoft's deal as good for the cloud gaming industry.

The speech comes from the European Commission's Executive VP, Margrethe Vestager, who points out that while the EU and the CMA shared initial concerns about the deal, their thinking on the deal diverged significantly. While the CMA believes the acquisition needs to be stopped in order for the cloud market to flourish, Vestager says not all vertical mergers need to be viewed in a negative light, adding that Microsoft's investment in this area, combined with the EU's agreed remedies, would allow the cloud gaming market to flourish in a way it otherwise wouldn't have.

“No less recently than last week, we cleared the Microsoft/Activision deal, while the CMA decided to block it. That divergence raises important questions regarding our assessment, our remedies policy and our cooperation.”

“First, a few words on policy. Currently, some people think that agencies should either block or clear mergers. Nothing in between. So if you block you are a “tough” enforcer. If you clear, well, let's just say you are not perceived as tough. That is not our policy. The European Courts have held that we cannot, as a matter of principle, dismiss remedy proposals. We have to investigate the merits of every solution offered.”

Going deeper into the EU's divergence from the CMA on the subject of Microsoft/Activision, Vestager says:

“Occasionally, we reach decisions that are not aligned with every other jurisdiction. So I'd like to take a few moments to set out why we believe the Microsoft/Activision merger – with appropriate remedies – is not only compatible with the Single Market, but in fact represents a positive development.”

The EU acknowledges that Microsoft's acquisition of Activision Blizzard is a “landmark transaction” in the gaming industry, but the investigation found that Microsoft's proposal would have more benefit to the industry, particularly the cloud gaming industry, with appropriate remedies in place. The EU was able to negotiate a global, free license for cloud gaming providers and consumers for Activision Blizzard titles for at least the next ten years.

In the pre-merger situation, Activision has not shown interest in bringing its titles to cloud services, so in this case, the EU finds that the remedy “opens the door for smaller cloud services in the EU to offer big games on their platforms, widening choice for gamers”.

The EU also said the benefits of this remedy were universally recognised amongst consumer groups, developers, distributors and cloud gaming providers, as it is seen to be unlocking “the potential of the cloud market”.

“Again, let me emphasize that these types of remedies are the minority of our cases, by far. But when they work, why deprive ourselves of the option? This is what useful enforcement is all about”, Vestager continues.

Currently, Microsoft is appealing the CMA's ruling with hopes of having it overturned. The timeline for the appeal has not been set yet, so expect to hear more in the next few months.

You can read Vestager's whole speech here. If you are interested in this story and have been following it closely, then it is a highly recommended read.

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KitGuru Says: Typically, we don't see regulators speaking so openly on their support or lack of support on mergers outside of the public reports that have to be published whenever a major decision is made. What's more interesting here is that the CMA seems to believe Microsoft already has a monopoly on cloud gaming, while the EU recognises this as not being the case, with many competitors out there, ranging from the likes of Nvidia and Amazon to smaller players like Boosteroid and NWare.

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