Microsoft to Get Approval of Activision Blizzard Deal from EU Next Week [RUMOR]

Reuters sources are claiming today that Microsoft will receive approval for its massive $68.7 billion deal to buy Activision Blizzard from the European Union regulator next week, on Monday, May 15th.

Reuters shared a similar rumor in early March. However, in the meantime, the United Kingdom's Competition and Markets Authority has blocked the deal.

For a long time, regulators expressed concerns about what would happen to the console market if Call of Duty was made exclusive to Microsoft's Xbox platforms. It was also the argument often used by the most vocal opponent to the deal, Sony. The CMA ultimately had to agree with Microsoft that it wouldn't be at all financially convenient to pursue such a strategy, given that most of the revenue earned by Call of Duty on consoles comes from PlayStation platforms.

However, they blocked the deal on the grounds that acquiring Activision Blizzard's prized IPs (Call of Duty, Diablo, Overwatch, Warcraft, Starcraft, Crash, and many others) would allow Microsoft to foreclose competitors in the nascent cloud gaming market. The CMA created a market that doesn't quite exist in those terms, according to many analysts, and also used the entirety of the Xbox Game Pass Ultimate subscriber base to come up with the 60-70% leadership figure that Microsoft allegedly has in that specific market, even if many Game Pass Ultimate users never even tried the XCloud streaming service (it's not even available in some countries).

Approval from the European Union would certainly strengthen Microsoft's fighting stance. As you'll recall, president Brad Smith had some harsh words for the CMA, suggesting to UK Prime Minister Rishi Sunak that he should take a hard look at the independent organization. He also

Almost every aspect of the numerical factual analysis, from the market share estimate to the size of the market, to just an understanding of how the cloud technology works is in our view, fundamentally flawed and incorrect. But second, the whole basis for this concern is the possibility that Microsoft would buy a gaming studio and not make the games that it's buying available on alternative cloud streaming services. And yet we have already signed contracts to make these games available on alternative services. They're not available today. We offered to commit to a 10-year binding undertaking to the CMA as we have in Brussels that we would commit and provide these games for a decade on alternative services.

What Microsoft offered to the CMA was a commitment that these very games we are acquiring would be available from services that are not run by Microsoft, they're not sold by Microsoft. They would be available on other computer operating systems and other devices. Not those from Microsoft. We think that's good business because that's how the games would be distributed as broadly as possible. That's good for gamers. I don't think the consumers of Britain benefit by stopping access to more games on more platforms through more services. And that is exactly what we have offered to do.

Microsoft is set to appeal the CMA ruling. Appeals go through the Competition Appeal Tribunal, which can order the CMA to re-evaluate the case if it finds the Competition and Markets Authority has acted irrationally. The percentage of successful appeals is relatively low, though Microsoft has hired Daniel Beard KC, who is considered to be a leading lawyer regarding competition and regulatory law. He helped Apple and Intel overturn billion-dollar fines and tax demands from the European Union.

Written by Alessio Palumbo