EU investigates Microsoft’s deal to buy Activision Blizzard

The European Union (EU) has launched an investigation into Microsoft’s planned takeover of video game giant Activision Blizzard, fearing the 69 billion US dollar (£59.7 billion) deal would distort fair competition in the market.

Microsoft, maker of the Xbox gaming system, first announced the agreement to buy the California-based game publisher in January, but still awaits scrutiny from antitrust regulators in the US, Europe and elsewhere.

If it goes through, the all-cash deal would be the largest in the history of the technology industry.

Members of the European Commission, the 27-nation bloc’s executive arm, said in a statement on Tuesday “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”.

At the heart of the dispute is who gets to control future releases of Activision Blizzard’s most popular games, especially the first-person military shooter franchise Call Of Duty.

Activision this week said its latest instalment, Call Of Duty: Modern Warfare 2, has already made more than one billion US dollars (£860 million) in sales since its launch on October 28.

Microsoft’s console rival Sony, maker of the PlayStation, has brought its concerns about losing access to what it describes as a “must-have” game title to regulators around the world.

In response, Microsoft has promised to keep Call Of Duty on the PlayStation “for at least several more years” beyond its current contract with Sony.

It also has said it might make it available on Nintendo’s Switch console, where the game is not currently available.

In a preliminary probe, the EU found potential antitrust issues with the distribution of video games and halting access to Microsoft’s rivals. The bloc said it “has concerns that the proposed acquisition may reduce competition on the market for PC operating systems”.

Microsoft said it will keep working with the European Commission on next steps “and to address any valid marketplace concerns”.

“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,” Microsoft said in a statement on Tuesday.

“We want people to have more access to games, not less.”

Activision Blizzard CEO Bobby Kotick said in an email to employees on Tuesday that global competition in the video game industry makes it “understandable that regulators are trying to better understand the games business”.

But he said the “process is moving along as we expected” and foresees the deal closing by June.

“We will continue to co-operate with the European Commission where, in the countries they represent, we have many employees,” Mr Kotick wrote.

He highlighted Brazil’s recent approval, saying the country’s competition authority understood “we operate in a highly dynamic and competitive industry, and that the merger will not harm competition in any way”.

Saudi Arabia has also signed off on the deal, but it still awaits important decisions from the US Federal Trade Commission and authorities in the UK and EU.

Tuesday’s decision was another example of how the EU has led the way on regulating Big Tech companies, opening antitrust investigations, enacting strict regulations on data privacy and pushing through landmark rules that threaten online platforms with billions in fines unless they respect fair market conditions and crack down on harmful content like hate speech and disinformation.

It is possible regulators could impose conditions on the gaming deal that force Microsoft to keep access open to Call Of Duty for longer and ensure that its rivals are not getting a lesser version.

Among those listening to Sony’s concerns are antitrust regulators in the UK.

Last month, they escalated their investigation into whether Microsoft could make Call Of Duty and other titles exclusive to its Xbox platform or “otherwise degrade its rivals’ access” by delaying releases or imposing licensing price increases.

“These titles require thousands of game developers and several years to complete, and there are very few other games of similar caliber or popularity,” according to a September report from the UK’s Competition and Markets Authority.