Microsoft has received its green signal to move forward with its acquisition of the Call of Duty publisher Activision for $69 billion (55 billion). Microsoft Corp won the European Union antitrust approval on Monday, strengthening its foothold in the gaming industry worldwide.
The UK had blocked this deal three weeks earlier on suspicions that this would damage the healthy competition in the emerging cloud gaming business. This purchase deal is dangling between different jurisdictions amongst several global regulatory bodies.
This deal could push Chinese and South Korean regulators to look into competition issues, just as the British regulators did and vetoed the deal. Microsoft and Activision require approval from the US, UK, and EU regulatory bodies.
The tech goliath is fighting for the world’s largest gaming takeover. The next hearing date is 24 May, when it will have to appeal a decision by the Competition & Markets Authority (CMA) of Britain to block it.
It received approval from Japan back in March. But, the US Federal Trade Commission registered a case in December to block it. It is anticipated that the ruling would not come before the end of the year.
The European Commission has a different stance stating the takeover as a pro-competitive move as Microsoft has made agreements with other competing game streaming platforms to offer a 10-year free licence to the popular games of Activision like ‘Call of Duty’. This would enable European customers and cloud gaming services to have access to the PC and console games of Activision.
The EU competition watchdog has stated that Microsoft’s commitments are completely aligned with the Commission’s concerns regarding crushing the competition and those commitments agree to boost the cloud gaming space as a whole from its current level. An in-depth market study has reported that Microsoft would not be able to harm other consoles and multi-game streaming services in the market.
Some service providers have already made agreements with Microsoft for cloud gaming streaming services. Microsoft has signed licensing deals with Nvidia, Nintendo, Japan’s Ubitus, and Boosteroid from Ukraine to onboard Activision games on their platforms
Regulatory Battle
The UK’s CMA vetoed the deal last month bringing in significant challenges for a successful purchase. The UK watchdog has been seen flexing its power on the global regulatory stage after Brexit.
Microsoft and Activision have come together to file an appeal and hired powerful lawyers who have once represented the British Royals to fight against the watchdog.
Sarah Cardell, the chief executive of CMA said that the acceptance of Microsoft’s proposals by the European Commission wouldn’t change their stance, as that would give absolute power to Microsoft to set the terms and conditions for the gaming industry on its own will for the next 10 years.
She added that this would destroy the free, open, and competitive market with one subject to ongoing regulation of the games Microsoft sells, the platforms it sells upon, and the conditions of sale.
Cloud Gaming
Sony has beaten Microsoft in terms of sales in the console market in recent years. This has made Microsoft uncomfortable and strive to strike a deal with Activision, which will help them fight against Sony with better services on the platter.
Microsoft wants to build a huge offering in its Game Pass service, like an OTT platform for games. This seems to be Microsoft’s vision behind making a humongous investment of $69 billion, which is the future availability of games.
The current Game Pass offer is luring but lacks the volume and calibre of new titles to completely change the way people play. The deal will give it control over some of the most popular games in the world like Call of Duty, World of Warcraft, and Overwatch.
Microsoft believes that players would like to have a plethora of gaming options with just one subscription rather than making a different purchase for each of the games they wish to play. This could be the future as most of the generations have similar experiences in engaging with visual content on OTT platforms like Netflix, and Amazon Prime, which offer plenty of options under one roof.
Cloud gaming will be the master copy model of OTT services. Here, players will be able to stream their game from devices of their liking, a console, a mobile phone, or a custom-built PC.
CMA has argued that the cloud gaming space is small and a developing sector due to the technological requirements and the entry of Microsoft in this industry at such a nascent stage will give it absolute dominance in this future sector.
