Microsoft-Activision deal faces deeper EU probe

Despite repeatedly underscoring its plan to keep its games on different platforms even after the $68.7 billion Activision merger is finalized, Microsoft still failed to convince the European Union during its preliminary investigation. The commission expressed concerns that the acquisition could result in “foreclosure strategies” that might “reduce competition in the markets for the distribution of console and personal computers video games and for PC operating systems,” pushing it to move to a deeper probe.

EU released a press release detailing its decision regarding its first investigation, which stresses the possibility that Microsoft may prevent its competitors from accessing Activision Blizzard’s console and PC video games, especially Call of Duty. The commission also describes how Microsoft already has a vast reach to customers through its ample resources, such as its Windows PC operating system and cloud computing service Azure. It also underlined Microsoft’s reputation as a game developer, publisher, and distributor. Through the proposed acquisition of a company with the same huge roles in the gaming industry, the EU believes that the competition on console/PC video games distribution, multi-game subscription services, and cloud game streaming services might decline.

“The preliminary investigation suggests that Microsoft may have the ability, as well as a potential economic incentive, to engage in foreclosure strategies vis-à-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,” EU added. “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 EU further explained that if Microsoft implements such actions, the public could end up facing higher game prices while having lower quality and fewer innovations in their games. Lastly, the commission says that the company could also use the merger to further boost the reputation and image of its Windows computer system to prevent the public from purchasing non-Windows PCs.

In the end, the EU said it would have the deeper probe for 90 working days, lasting until 23 March 2023.