The European Commission, the executive of the European Union (EU), is now starting its “in-depth investigation” of Microsoft's acquisition of Activision Blizzard.
Similar to the UK's stance on the deal, the EU is also worried that this deal will reduce competition. To be exact, they are “concerned that the proposed acquisition may reduce competition in the markets for the distribution of console and personal computers (‘PCs') video games and for PC operating systems.” The EU's stance actually brings up one part of the deal that, to my understanding, the UK did not. That is, this deal does not just affect the PlayStation vs. Xbox competition. It also affects the operating system market.
Since Microsoft owns Windows, they can theoretically make games exclusive for Windows as well. Players who want to play the game would then need to buy a Windows PC. To be specific, they brought up “Microsoft's distribution of games via cloud game streaming to Windows.” The commission also brought up multi-game subscription services. They were most likely referring to the Xbox Game Pass that brings free games to both Xbox and PC. As with above, they are concerned that “Microsoft may foreclose access” to the games it owns.
Such foreclosure strategies could reduce competition in the markets for the distribution of console and PC video games, leading to higher prices, lower quality and less innovation for console game distributors, which may in turn be passed on to consumers.
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 rival providers of PC operating systems.
This is actually a legitimate line of inquiry. There are games that are playable on Windows that are not available on Linux and macOS. The commission thinks that this deal could potentially widen the gap between Windows and other operating systems when it comes to game availability. The Commission also homed in on “Call of Duty” as an example of games that Microsoft can foreclose access to. Phil Spencer, Microsoft Gaming CEO, always reminds people that they will not make Call of Duty exclusive.
The EU Commission gave itself 90 working days, or until March 23, 2023, to finalize its decision. This is close to the March 1, 2023 deadline that UK's Competition and Markets Authority set for their decision. All we can do now is wait for the result of the EU's investigation of the Microsoft – Activision Blizzard deal. Saudi Arabia and Brazil have already given their approval to the Microsoft-Activision Blizzard deal.
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