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Europe Backs Microsoft to Buy Call of Duty Maker Activision Blizzard, but Deal Still Faces Legal Challenges

European regulators have approved Microsoft’s $US69 billion ($102 billion) purchase of video game company Activision Blizzard, deciding the deal will not suppress competition to the US company’s Xbox game console.

According to Refinitiv data, the Microsoft-Activision merger would be the game industry’s biggest deal in history, trumping Bayer’s $US64 billion offer for Monsanto in 2016.

Europe’s antitrust watchdog, the European Commission, said the purchase was pro-competitive due to Microsoft’s agreement to license popular Activision games to rival cloud gaming services. 

“[It] would no longer raise competition concerns and would ultimately unlock significant benefits for competition and consumers,” the commission said.

The merger deal, which would make Microsoft the third largest game publisher in the world after Tencent and Sony, still faces legal challenges in the United States and UK. 

In its latest update, the Australian Competition and Consumer Commission (ACCC) said it is still “engaging with overseas regulators” as it carries out its own review.

Liam Deane, a game industry analyst for tech research firm Omdia, said the EU’s approval “has removed one potential major roadblock for this deal” but “it doesn’t necessarily mean they’re in a stronger position” to pass it through other regulators.

Large Activision and Blizzard logos are brandished on the rounded sides of a large room lit in purple
The merger deal would make Microsoft the third largest game publisher in the world.(AP: Jae C Hong)

Sony, which makes the PlayStation game console, has been resisting the all-cash deal since it was announced more than a year ago.

The company raised concerns with antitrust watchdogs around the world about losing access to popular Activision game franchises like Call of Duty and World of Warcraft. 

After its review, the European Commission dismissed the possibility that Microsoft would cut off its games from PlayStation, saying that excluding the most popular gaming console would put a big dent in its profits.

The commission approved the deal after accepting Microsoft’s offer to modify its licensing agreements to allow users and cloud gaming platforms to stream its titles without paying royalties 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 in a statement.

Microsoft to appeal UK decision

The EU’s decision is at odds with the stance taken by British antitrust regulators who rejected the merger last month over concerns it would hurt competition in the small but rapidly growing cloud gaming market.

Britain’s Competition and Markets Authority said in a statement on Monday it “stands by its decision”. 

“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 chief executive Sarah Cardell said.

“They would replace a free, open and competitive market with one subject to ongoing regulation of the games Microsoft sells, the platforms to which it sells them, and the conditions of sale.”

Microsoft has said it will appeal the UK’s decision at a tribunal, with a ruling expected to take months.

The company is also expected to face down regulators in the US, where the Federal Trade Commission is taking Microsoft to court to block the deal. 

Source : ABC News