EU launches in-depth investigation into Microsoft’s proposed acquisition of Activision Blizzard | VGC

The European Commission has officially launched an in-depth investigation into Xbox Game Studios (Microsoft) [2,289 articles]” href=”https://www.videogameschronicle.com/companies/microsoft/”>Proposed acquisition of Activision Blizzard by Microsoft [1,158 articles]” href=”https://www.videogameschronicle.com/companies/activision-blizzard/”>Activision Blizzard.

As expected, following its initial investigations into the $68.7 billion deal, the European watchdog said on Tuesday it had opened a “phase II” investigation over competition concerns.

“The Commission is concerned that the proposed acquisition may reduce competition in the markets for the distribution of consoles and personal computers (“PC [6,508 articles]”href=”https://www.videogameschronicle.com/platforms/pc/”>PC’) video games and for PC operating systems,” he said.

The Commission now has 90 working days, until March 23, 2023, to make a final decision on the deal.

He said his preliminary investigation showed the transaction could significantly lessen competition in several areas.

“In particular, the Commission is concerned that by acquiring Activision Blizzard, Microsoft will prevent access to Activision Blizzard’s console and PC video games, in particular high-profile and popular games (so-called “AAA” games) such as that ‘Call’ of duty,” he wrote.

“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 distributing Activision Blizzard’s console video games on consoles or degrading the terms of use or access to such video games.

“With regard to multi-game subscription services and/or cloud game streaming services in particular, the Commission is concerned that by acquiring Activision Blizzard, Microsoft will block access, to the detriment of its distributor competitors. from console and PC video games that offer such services, to its own PC and console video games, which are essential for the provision of the nascent multi-game subscription and cloud game streaming services.

“Such foreclosure strategies could reduce competition in console and PC video game distribution markets, leading to higher prices, lower quality and less innovation for console game distributors, which could in turn be passed on to consumers.

“Finally, at this stage of the investigation, the Commission is concerned that the proposed acquisition will reduce competition in the market for PC operating systems. In particular, the Commission is concerned that Microsoft may reduce the ability of competing PC operating system vendors to compete with Microsoft’s Windows operating system, by combining Activision Blizzard’s games and Microsoft’s distribution of games through the cloud game streaming to Windows. This would discourage users from buying non-Windows PCs.

“The preliminary investigation suggests that Microsoft may have the ability, as well as a potential economic incentive, to engage in such conduct vis-à-vis competing PC operating system vendors.”

The proposed acquisition is being scrutinized by regulators around the world amid antitrust concerns at a time of increasing consolidation in the gaming industry.

While the deal has been cleared by regulators in Saudi Arabia and Brazil, the UK Competition and Markets Authority recently extended its investigation into a second phase. He is in the process of inviting members of the public to share their views on the acquisition before making his final decision by March 1.

The U.S. Federal Trade Commission could issue its decision on the deal this month.

Phil Spencer, Head of Games at Microsoft [486 articles]” href=”https://www.videogameschronicle.com/people/phil-spencer/”>Phil Spencer recently said he thinks scrutiny from regulators is “fair” and “warranted”, and that he remained confident that the deal would be approved.

Bobby Kotick, CEO of Activision Blizzard [99 articles]” href=”https://www.videogameschronicle.com/people/bobby-kotick/”>Bobby Kotick echoed that sentiment in a message sent to employees on Tuesday, in which he said “the process is going as intended” .

He wrote: “Because so many large global companies around the world are now competing in the nearly $200 billion gaming industry, it is understandable that regulators are trying to better understand the gaming industry. This week, the European Commission announced that we have entered the second phase of our review in the region. We will continue to cooperate with the European Commission where, in the countries it represents, we have many employees.

“We have worked closely with Microsoft to actively engage regulators in other key countries to answer their questions and provide them with information to help them in their review. People from all of our business units and functions have been involved in this regulatory work, and I want to thank each of you for your tireless work and commitment to bringing this merger to fruition, which we continue to expect to close in Microsoft’s current fiscal year ending in June 2023.”

Activision [1,010 articles]” href=”https://www.videogameschronicle.com/companies/activision-blizzard/activision/”>Activision said Monday that Modern Warfare 2 continues to be the best-selling entry in the Call of Duty series following its released on October 28.

After surpassing $800 million in sales in its first three days of availability, Modern Warfare 2 crossed the $1 billion mark in 10 days. In doing so, it surpassed the record previously held by Black Ops 2 in 2012, which took 15 days to reach $1 billion in sales.