EU Regulators Approve Microsoft Purchase Of Activision-Blizzard; Appeals Elsewhere Gain Steam

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ZombiePie

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#1 ZombiePie  Staff

The European Commission has required Microsoft to license popular Activision Blizzard games automatically to competing cloud gaming services. This will apply globally and will empower millions of consumers worldwide to play these games on any device they choose.

— Brad Smith (@BradSmi) May 15, 2023

As the Tweet from Vice Chair and President of Microsoft indicates, EU regulators have approved Microsoft's proposed purchase of Activision-Blizzard. The EU joins Saudi Arabia, Brazil, Chile, Serbia, Japan, and South Africa in approving the deal. China, South Korea, New Zealand, and Australia are still processing the proposed merger and business regulators in these countries have yet to render verdicts. It is worth noting that Microsoft is not getting Activision-Blizzard willy-nilly and they have accepted the same concessions they have given to all federal regulators in promising to grant 10 year licenses for its games to anyone who wants them, regardless of their platform. With such a large block of the world now giving the deal a thumbs up, Microsoft is unlikely to give up or seek what many considered the "nuclear option" which would have involved them signing unofficially exclusivity deals and buying IP rights piecemeal.

In terms of the UK, current prime minister Rishi Sunak is already showing signs that his preference would have been that the purchase go through with the same concessions that satisfied EU regulators. Conservative MPs grilled the leader of the CMA demanding him to justify blocking the deal in light of the EU decision. The UK government's Business and Trade Committee questioned whether the CMA had considered the effects of blocking a deal like this on the UK's international reputation. To bolster hopes of a successful appeal, Activision has hired David Pannick, Baron Pannick. In terms of the United States, while the FTC is standing firm, it is worth pointing out that the Roberts Court is statistically the most pro-business Supreme Court in the modern history of the United States of America.

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Broshmosh

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It is intensely rich for the UK govt to be asking if the CMA considered the appearance of the UK on the world stage. The UK govt. has not once considered the optics of the UK on the world stage in any of the major decisions it has made in the past 10 years. Typical Tory bullshit.

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sparky_buzzsaw

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Sure, yeah, corporate speak, companies devouring companies, we will all soon be corporate cattle, but where in all this news is my goddamn modern Blackthorne reboot?!

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ThePanzini

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@broshmosh: This isn't the government though the headline is inflammatory because of recent events, the CMA periodically face questions from MP's this is standard practice.

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Broshmosh

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#5  Edited By Broshmosh

@thepanzini: Not got an issue with them questioning the CMA. It's good to ask questions of regulatory bodies.

Got an issue with them questioning the CMA about whether they had considered how their actions could lead to damaged perceptions of the UK on a global scale.

It comes across as extremely rich, given how government decisions have actively damaged perceptions of the UK on a global scale, yet no acknowledgement of this has been made. Accusations of this have been made, and presented to govt, but the Tories have doubled down on every opportunity.

Thing is, govt don't care about damaged public perceptions, they care about damaged business perceptions. This is becoming abundantly clear.

EDIT: To clarify my use of langauge, I am using "government" as a short-hand for the Tories and their various MPs, as the Tories currently are the government. I am aware the two are not always interchangeable, but right now they are functionally the same thing.

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ThePanzini

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@broshmosh: This was a cross party select committee, if anything the tories probably like the UK being put of step with the EU.

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Broshmosh

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#7  Edited By Broshmosh

@thepanzini: Whilst the comittee is cross-party, the minister who asked that question is Bim Afolami, a conservative minister. (Time code 11:03:04). They asked their question, whether the CMA considers its actions in relation to the world stage, and when given an answer that indicates the CMA does do this, re-iterated that they wanted the question answered specifically relating to the world-stage opinion with relation to this block. Bokerrink's answer has some subtext that speaks to what I'm getting at.

Whilst I appreciate that any minister could ask this, that it comes from a Tory minister continues to leave a poor taste in my mouth. That said, I would still feel pretty uncomfortable if a Labour minister had asked this, though in that case the reality that Labour's had a lot less control over global opinion would be relevant.

In fairness to Mr Afolami, he voted to remain in the Brexit referundum, so clearly this minister does have a reasonable stake in the global opinion discussion. Regrettably he has adhered to the whip in every other vote, but I realise the whip includes a lot of career pressure especially for a younger MP. I'm not sure how much he was able to suggest when it came to public opinion whilst he was the private secretary for Liz Truss (Pork Markets!!!), but I can't say his track record fills me with confidence that his question was asked in best faith. It's particularly dodgy when he starts to imply the CMA is doing work the FTC cannot. Nuance be thy name. Do not forget, the only reason Afolami is no longer the vice-chair of the party is because Johnson made such an absolute public mess.

As for govt wanting to be out of step with Europe, nothing in the discussion relating directly to this question seems to indicate this. If anything, Afolami indicates in a follow-up question to Bokkerink that following the EU's decision would've been preferable. Obviously Afolami is not government, so I'll rein in my thinking before it gets too outlandish, but I would not be surprised if following the EU's decision here would've been preferable to many in power; After all, from Afolami's implications, this block made it look like the UK is not open for business.

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bigsocrates

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Seems like a weird time for Microsoft to be trying to add Steam to the deal, because if they buy that they really will have close to a monopoly on PC gaming!

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mellotronrules

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i don't have horse in this race, so ultimately i have difficulty summoning outrage in either direction. i'm ready for the corporate-cheerleading by non-shareholders to end, though.

also, it'd be nice generally speaking for businesses to find new ways to innovate than just M&A until the heat death of the universe.

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cikame

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#10  Edited By cikame

I'm so blown away by how involved this is, i have no idea why this acquisition is so difficult, i feel like other parties have injected their lawyers into every step of the process to convince regulators that this is more significant than it actually is.

It's just over Call of Duty right? Because from what i can see the rest of ActiBlizzard's operation has a pretty minor impact on the industry, for one Activision don't even make any other games really, a new Crash Bandicoot game, Spyro and Tony Hawk remasters... that's it, Blizzard are at their absolute lowest constantly failing to impress but have a few reliable franchises, at Kotick's own admission the company is not not putting significant R&D into cloud gaming, VR or other up and coming trends, possibly because they're busy paying off endless lawsuits from their seriously abused workforce.

So why are regulators obsessing over them monopolising the cloud gaming market? Which i guess they haven't noticed isn't exactly booming with Google totally abandoning the idea, why aren't Sony trying to make an impact on the supposedly ripe and ready cloud gaming market? In 2012 they acquired Gaikai for $380m to do just that so what are they waiting for? You can't wait 11 years then complain because other people are doing it better than you, they even picked up the failed cloud gaming platform OnLive.

So... it's Call of Duty then, and they make it sound like it's the only competitive shooter on the market, regulators should probably be made aware that a man in Ireland created PUBG which changed the competitive shooter space overnight, Epic copied it and created probably the most profitable shooter of all time with Fortnite, a reminder that Epic used that success to try to create their own monopoly in the PC market but regulators were probably busy, maybe Valve is seen as the monopoly because they had the balls to deliver a good service to the consumer but that's another story, they have the still very popular Counter Strike, the point is Call of Duty doesn't own the online shooter space.

MS have Halo but it's not hitting like it used to, Gears is probably still pretty popular i don't know, they're making a new Perfect Dark, Nintendo have Splatoon, Sony have... oh, i see the problem, Sony is relying on third parties to satisfy the competitive multiplayer market on their console, they COULD make their own they have Killzone, SOCOM and Resistance but they aren't bothering so of course they're worried about losing Call of Duty, the crazy part is that Activision make a lot of money on its microtransactions so it absolutely 200% benefits them to have COD available on every single platform, hell Warzone is free to play whose profit is entirely dependant on getting as many people online as possible, cutting off Playstation players (the largest piece of the console market) would be shooting themselves in the foot, Overwatch relies on that too.

This whole thing is ridiculous, it's not about the cloud we're pretending exists, buying COD doesn't create a monopoly... it's just regulators and politicians who don't understand it listening to lawyers who are lying or also don't understand it.

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#11 ZombiePie  Staff

@broshmosh: This isn't the government though the headline is inflammatory because of recent events, the CMA periodically face questions from MP's this is standard practice.

I would tend to agree with you if it were not for multiple reports saying that Sunak views the blocking of the deal as counter to his economic plan of making the UK tech leader. Some have already pointed out that his deregulation package/plans was conveniently timed to the CMA's rejection of the deal.

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ThePanzini

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#12  Edited By ThePanzini

@zombiepie: Yeah I would believe the government would have wanted the deal to go though, but after the CMA blocking the deal and MS very vocal rehotric, an MP's questioning the potential impact would be expected.

The CMA coincidentally received more powers following the block, I wouldn't trust anything the Tories say.

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ALLTheDinos

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Speaking on the FTC side of things (note: I am not an employee of nor have I ever worked with the FTC directly), Lina Khan is very much dedicated to making it more difficult for companies to complete these large-scale M&As. Whether or not the FTC wins the resulting court case is irrelevant; it’s much more of an ideological pushback against the government’s extraordinary pro-business practices over the last many decades. The real impact is tough to quantify, because you can’t prove that any acquisition attempt was scuttled after both sides saw that the FTC would make it as difficult as possible. I think it’s a necessary approach from the agency, which has really just not done enough under other administrations.

More pragmatically, I think the agency believes that it can extract more meaningful concessions from Microsoft by moving the goal posts. I don’t know if MS would be humoring unionization to the extent it has (so far) without a more hostile government attitude to their actions. This country relies far too heavily on legal precedent, which also increasingly means a couple ideological extremists’ interpretations of legal precedent, and I think the current FTC is pushing against its limitations.

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apewins

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I'm a little disappointed with the EU and their reasoning here. They're agreeing because Microsoft is licensing Call of Duty for 10 years to competitors. That goes by very quickly and of course Microsoft is in this deal for the long term, they're already looking at the 2030s and beyond. Cloud gaming isn't viable yet anyway for most people but it will be in the future. They're basically saying that if you want a monopoly that's okay if you're willing to wait a few years.

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bigsocrates

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@apewins: I'm against this merger personally, but I think you're being a bit hyperbolic here. For one thing there's no guarantee that COD will still be an industry ruling behemoth in 10 years. It's showed signs of softening in the past and by comparison if you look at the top selling games of 2013 you see franchises like Tomb Raider, Just Dance, and Skylanders that have either fallen off or gone dormant. Nothing stays on top forever. COD is also not a monopoly in any way. The Battlefield series is the most obvious competitor but there are also things like Fortnite that are arguably bigger and if you just want to include huge multiplayer games there's GTA and lots of other stuff.

I think the EU should have blocked this deal just because nobody except corporations are served by continuing consolidation in gaming, but 10 years actually is a long time in media (every franchise cools eventually, except Mario Kart) and COD does have active competitors. It's not a monopoly.

As for cloud gaming...I think that's a weird and unpredictable aside. Who knows how that will play out.

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ThePanzini

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It's worth noting Xbox market share across the EU is absolutely tiny, Sony outsells them 10 to 1 even in the larger countries.

ABK titles would boost cloud gaming in the short term, and would make MS a lot more competitive in the console space.

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#17 Shindig  Online

I'm still unsure Microsoft have it in them to make a success out of this. CoD's on a downturn but it still smashes at retail. How much of an impact would putting that on Gamepass would that have? How much of that crowd is married to the retail experience or paying full price for a new Call of Duty?