In its announcement, the European Commission outlined the factors that led to it opening an in-depth investigation. A preliminary inquiry raised concerns around the deal reducing competition in the video game and console distribution markets; the Commission also noted potential issues surrounding the market for PCs, writing that the merger might “discourage users [from buying] non-Windows PCs.”
“We must ensure that opportunities remain for future and existing distributors of PC and console video games, as well as for rival suppliers of PC operating systems,” wrote Margrethe Vestager, executive vice president in charge of competition policy. “The point is to ensure that the gaming ecosystem remains vibrant to the benefit of users in a sector that is evolving at a fast pace.”
The Commission has until March 23 to make a decision on the deal.
Analysis: Microsoft’s regulator-appeasing claims about Game Pass and competition are hollow
Sony, one of Microsoft’s primary competitors in the video game industry, has warned regulators that the merger could give Microsoft an unparalleled advantage in the industry by giving the company control of the lucrative Call of Duty franchise. Microsoft, in turn, has tried to assuage regulators’ concerns by saying it would not restrict access to Call of Duty games, and would pursue a strategy similar to the one it has followed with “Minecraft,” another popular game it owns. “Minecraft” is readily available on most popular consoles and platforms.
“We’re continuing to work with the European Commission on next steps and to address any valid marketplace concerns,” Microsoft spokesperson David Cuddy told The Washington Post. “Sony, as the industry leader, says it is worried about Call of Duty, but we’ve said we are committed to making the same game available on the same day on both Xbox and PlayStation. We want people to have more access to games, not less.”
Still, some antitrust scholars and regulators have grown wary of unenforceable promises.
“I don’t know for sure that Microsoft would remove Call of Duty from the PlayStation — it might not benefit them — but they might,” Mitch Stoltz, senior staff attorney for nonprofit digital rights group Electronic Frontier Foundation, told The Post last week. “If they did decide to remove Call of Duty from the PlayStation, the antitrust enforcers couldn’t stop them unless they had made a binding promise not to do that. Essentially, the merger is the antitrust enforcers’ only opportunity to stop Microsoft from making Call of Duty exclusive to the Xbox, so I’m not surprised they’re raising it now.”
Activision Blizzard CEO Bobby Kotick emailed employees Tuesday morning with an update about Microsoft’s pending acquisition, reaffirming his expectation that the deal would close in June 2023.
“We will continue to cooperate with the European Commission where, in the countries they represent, we have many employees,” Kotick wrote in a letter also posted to the investor relations website. “We have been working closely with Microsoft to actively engage regulators in other key countries to answer their questions and provide them with information to assist with their review. People from across our business units and functions have been involved in this regulatory work.”
This is a developing story and it will be updated.