Call of Duty of the EU: Explore the deal between Microsoft and Activision Blizzard

BRUSSELS (AP) – The European Union has opened an investigation into Microsoft’s proposed acquisition of video game giant Activision Blizzard amid fears the $69 billion deal would distort fair competition to popular titles like Call of Duty.

Microsoft, maker of the Xbox gaming system, first announced the agreement to acquire the California-based games publisher in January, but it is still awaiting scrutiny by antitrust authorities in the US, Europe and elsewhere. If it goes through, the all-cash deal would be the largest in tech industry history.

Members of the European Commission, the executive body of the 27-nation bloc, said in a statement Tuesday that “ensuring the gaming ecosystem stays alive for the benefit of users in a rapidly evolving sector.”

“We need to ensure that opportunities remain for future and existing PC and console video game distributors, as well as competing PC operating system vendors,” the commissioners said. They have until March 23, 2023 to decide whether to agree to the deal.

At the heart of the dispute is who gets to control future releases of Activision Blizzard’s most popular games, specifically the first-person military shooter franchise Call of Duty. Activision announced this week that its latest installment, Call of Duty: Modern Warfare 2, has already grossed more than $1 billion since launch on October 28.

Microsoft’s console rival Sony, maker of the PlayStation, has raised its concerns about losing access to what it calls a “must-have” game to regulators around the world. In response, Microsoft has promised to keep Call of Duty on the PlayStation “at least a few more years” beyond the current deal with Sony. It’s also said it could bring it to Nintendo’s Switch console, where the game isn’t currently available.

In a preliminary investigation, the EU identified possible antitrust problems with video game distribution and stopping access to Microsoft’s competitors. The block said it has concerns the proposed acquisition could hurt competitors of Microsoft’s Windows operating system, as non-Windows computers may not be able to get Xbox’s game-streaming subscription service and growing collection of titles.

Microsoft said it will continue to work with the European Commission on next steps “and will address any legitimate market concerns.”

“Sony, as an industry leader, says it’s concerned about Call of Duty, but we said we’re committed to making the same game available on both Xbox and PlayStation on the same day,” Microsoft said in a statement from Tuesday. We want people to have more access to games, not less.”

Activision Blizzard CEO Bobby Kotick said in an email to employees Tuesday that the global competition in the video game industry “makes it understandable that regulators are trying to better understand the gaming business.” But he said the “process is progressing as expected” and expects the deal to close by June.

“We will continue to work with the European Commission, where we have many collaborators in the countries they represent,” Kotick wrote.

Highlighting Brazil’s recent approval, he said the country’s competition authority understood “that we operate in an extremely dynamic and competitive industry and that the merger will in no way harm competition.”

Saudi Arabia also signed the deal but is still awaiting key decisions from the US Trade Commission and authorities in the UK and EU.

Tuesday’s decision was another example of how the EU has led the way in regulating big tech companies, launching antitrust investigations, enacting tough privacy rules and enforcing landmark rules that have fined online platforms billions of dollars threaten if they don’t respect fair market conditions and crack down on harmful content such as hate speech and disinformation.

It’s possible regulators will impose conditions on the gaming deal that will force Microsoft to keep Call of Duty access open longer and ensure its competitors don’t get an inferior version.

Antitrust authorities in the UK are among those listening to Sony’s concerns. Last month, they escalated their investigation into whether Microsoft might make Call of Duty and other titles exclusive to its Xbox platform or “otherwise hamper access by its competitors” by delaying releases or enforcing license 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,” said a September report from the UK’s Competition and Markets Authority.

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O’Brien reported from Providence, Rhode Island.

Matt O’brien and Raf Casert, The Associated Press