Microsoft’s bid to buy Activision Blizzard clears a key hurdle. But the $69B deal is still at risk

On Monday, the European Union authorized Microsoft’s $69 billion acquisition of Activision Blizzard, ruling that the deal won’t hurt console games like Call of Duty and approving the U.S. tech company’s cloud gaming remedies.

British regulators rejected the mega merger, and U.S. authorities are seeking to stop it.

Microsoft’s promise to automatically license Activision games to cloud gaming platforms made the acquisition “no longer raise competition concerns and would ultimately unlock significant benefits for competition and consumers,” according to the European Commission, the 27-nation bloc’s executive arm and top antitrust watchdog.

According to Omdia gaming industry analyst Liam Deane, the commission’s approval “has removed one potential major roadblock for this deal,” but “it doesn’t necessarily mean they’re in a stronger position” to overturn the U.K.’s denial.

Regulators worldwide are concerned that Microsoft and its Xbox platform will dominate Activision’s hit properties like Call of Duty and World of Warcraft.

Sony, maker of the PlayStation gaming console, has fought hard.

Microsoft countered the opposition by licensing Activision titles like Call of Duty to Nintendo for 10 years and offered the same to Sony if the acquisition went through.

After its examination, the European Commission ruled out Microsoft removing its games from PlayStation, claiming that barring the most popular gaming platform would hurt its earnings.

Brussels investigated cloud gaming. Cloud gaming allows gamers stream their games to tablets, phones, and other devices via a cloud platform, saving them money on consoles and gaming computers.

The commission authorized the deal after Microsoft agreed to change its license agreements to allow consumers and cloud gaming platforms to stream its titles royalty-free for 10 years.

“The licenses will apply globally and will empower millions of consumers worldwide to play these games on any device they choose,” Microsoft President Brad Smith said.

Microsoft has signed partnerships to bring Xbox PC titles to Nvidia and Boosteroid cloud gaming platforms.

The commission highlighted that the licensing promises might boost the cloud gaming market “by bringing Activision’s games to new platforms, including smaller EU players, and to more devices than before.” Activision games are not available on cloud services.

Microsoft may benefit from the EU judgment while it fights the Federal Trade Commission in court to stop the transaction. The FTC’s in-house judge’s trial begins Aug. 2.

However, British antitrust officials last month blocked the biggest tech merger in history over concerns it would hinder competition in the small but rapidly growing cloud gaming business.

Britain’s Competition and Markets Authority said Monday that it “stands by its decision,” an unprecedented action that shows London’s tougher attitude.

“Microsoft’s proposals, accepted by the European Commission today, would allow Microsoft to set the terms and conditions for this market for the next ten years,” authority CEO Sarah Cardell stated. They would replace a free, open, and competitive market with one that regulates Microsoft’s games, platforms, and terms of sale.

The firms are appealing the U.K. verdict to a tribunal, but history is against them.

The watchdog rejected Facebook parent Meta’s purchase of Giphy over concerns it would impede innovation and competition. After losing an appeal, Facebook sold the GIF-sharing platform.

Microsoft would have to terminate the arrangement or carve out the U.K. as a distinct market if its appeal fails, said game expert Deane.