A victory for common sense
“The European Commission said the transaction was pro-competitive due to Microsoft’s agreement to licence popular Activision games such as ‘Call of Duty’ to rival game streaming platforms, confirming a Reuters report in March.
Such licences are ‘practical and effective’, European Union antitrust chief Margrethe Vestager told reporters.
‘Actually they significantly improve the condition for cloud game streaming compared to the present situation, which is why we actually consider them pro-competitive,’ she added, contrasting with the UK position that the deal would hit competition in that part of the market.”
In other words, the EU and UK agreed that the merger would help Microsoft consolidate its lead in the tiny cloud gaming market (just 1% of total gaming). But while the UK regulator determined Microsoft’s licensing agreements were insufficient to offset any risk to consumers, the EU found the agreements were good for consumers when combined with the improvements to cloud gaming that would come from this deal.
Remember, cloud gaming literally wouldn’t exist without Microsoft sinking significant capital into an experiment where many others (including Google) have failed, with zero guarantee of a payoff – the entire sub-industry could still fail. But it could also succeed and do to gaming what Netflix did to Hollywood, Blockbuster and shitty local TV (notwithstanding government efforts to prop up the latter). If it does take off, consumers won’t even be forced to use Microsoft hardware to play their (current) favourite games thanks to these licensing agreements.
The EU regulator’s decision is welcome; a victory for common sense and consumer sovereignty. But the merger still has one BIG hurdle to clear: the US Federal Trade Commission (FTC), which is currently chaired by Lina Khan. Khan made her name attacking Amazon’s low prices (how dare they!) and has publicly stated her opposition to anything that “trends towards concentration”, so will no doubt object to the deal (whether the FTC can convince a judge is another question entirely).
Australia’s review remains “suspended”, pending engagement with overseas regulators. Investors aren’t entirely convinced it will go through, either – Activision shares are currently trading at around $US78, or nearly 20% below Microsoft’s offer of $95 a share.