Microsoft’s decision to acquire Activision Blizzard has rocked the gaming industry. The massive deal is worth $68.7 billion and will likely shake up the sector's hierarchy once it is finalized. Microsoft is confident that the deal will push through.
However, it looks like it will be some time before the deal is finalized. Regulators from the European Union have opened an in-depth investigation into the deal involving two of the biggest players in the industry. The probe will assess the likely impact on competition if the deal goes through.
The European Commission started its investigation into the acquisition in September. It had set a November 8th deadline to either approve the deal or start an in-depth review. The regulators chose the latter after the UK’s Competition and Markets Authority (CMA) signaled its intent for a deeper investigation.
According to the statement of the European Commission, the decision was made with the belief that the deal would "significantly reduce competition on the markets for the distribution of console and PC video games, including multi-game subscription services and/or cloud game streaming services, and for PC operating systems."
The commission also stated it's concern that Microsoft "may foreclose access to Activision Blizzard’s console and PC video games," which include the popular Call of Duty franchise. Sony has said that Microsoft intends to make the Call of Duty series exclusive. Microsoft has repeatedly denied this and revealed instead that it wants to keep Call of Duty a cross-platform title.
"Such foreclosure strategies could reduce competition in the markets for the distribution of console and PC video games," the statement read, "leading to higher prices, lower quality, and less innovation for console game distributors, which may, in turn, be passed on to consumers."
"The Commission is concerned that Microsoft may reduce the ability of rival providers of PC operating systems to compete with Microsoft’s operating system Windows, by combining Activision Blizzard’s games and Microsoft’s distribution of games via cloud game streaming to Windows. This would discourage users to buy non-Windows PCs," the statement adds.
The European Commission has 90 days to submit a final report. The deadline for the submission of its findings will therefore be on March 23, 2023.
The in-depth investigation was widely expected after the UK CMA had earlier decided to probe deeper into the deal. According to the CMA, the deal may "give rise to a realistic prospect of a substantial lessening of competition in gaming consoles, multi-game subscription services, and cloud gaming services." Microsft has lashed out at the UK regulators, accusing them of siding with Sony and calling their concerns "misplaced".
Saudi Arabia was the first country to approve the merger between the two gaming giants. Brazil also positively endorsed the deal after hearing arguments from Microsoft and other industry players.
Activision Blizzard CEO Bobby Kotick said that completion of the merger is expected to be finalized in June 2023.