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The European Commission said it is concerned the deal may ‘significantly reduce competition’ in the video game market.
The EU has launched an in-depth investigation into Microsoft’s proposed acquisition of video game giant Activision Blizzard.
The European Commission said it is concerned that this deal could reduce competition in the video game and PC operating system markets.
Microsoft shocked the global gaming world in January when it announced plans to snap up video game publisher Activision Blizzard for $68.7bn – the biggest gaming acquisition ever recorded.
Microsoft is already a strong player in the gaming space with Xbox. But if the acquisition goes through, it will make the software giant the world’s third-largest gaming company by revenue, behind Tencent and Sony.
The European Commission said its preliminary investigation found that the deal “may significantly reduce competition” in the distribution market for console and PC video games. It could also impact the markets of multi-game subscription services and cloud game streaming services.
The Commission added that it is particularly concerned Microsoft may “foreclose access” to Activision Blizzard’s games, including high-profile titles such as the Call of Duty franchise.
“The preliminary investigation suggests that Microsoft may have the ability, as well as a potential economic incentive, to engage in foreclosure strategies,” the European Commission said in a statement this week.
“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.”
Earlier this year, the UK’s competition watchdog also said that Microsoft’s proposed acquisition could “harm rivals” and “substantially lessen competition” in the gaming sector.
The European Commission has until 23 March 2023 to make a decision on Microsoft’s planned acquisition. EU competition chief Margrethe Vestager said the in-depth investigation will assess “how the deal affects the gaming supply chain”.
“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,” Vestager added. “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.”
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