The European Commission has decided to investigate Microsoft's proposed acquisition of Activision Blizzard. The executive body of the European Union announced the probe on Tuesday, citing antitrust concerns as grounds for its decision to launch an "in-depth" review of the $68.7 billion deal. Microsoft is still expecting to complete the transaction in mid-2023.
The company's Xbox division proposed the Activision Blizzard acquisition in January. Its original timeline already left ample room for regulatory probes, including the newly confirmed investigation by the EU's antitrust watchdog. Today's announcement marks the end of the EC's preliminary review of the Xbox/Activision Blizzard merger which started in September.
The EC will now be looking to determine whether Microsoft's purchase of Activision Blizzard would reduce competition in the European video games market. EU antitrust chief Margrethe Vestager said the scope of the probe will hence extend to the entirety of "the gaming supply chain" and how Microsoft's proposed acquisition affects it. The ultimate goal is to ensure that European gaming market still offers comparable opportunities to both existing and future game distributors, Vestager said. British competition regulator CMA already expressed antitrust concerns about the deal earlier this month.
In accordance with the Commission's statues, its investigators now have 90 working days to publish their findings. Therefore, the first-instance decision will be made no later than March 23, 2023. Microsoft will then be able to appeal the verdict within two months. The European legal framework also leaves room for another appeal, but that process would likely take years to run its course. Should the investigators tie up the deal in second-instance courts, there is a realistic chance that Microsoft would drop the proposed acquisition altogether. Doing so would be a costly affair, however, as Activision Blizzard negotiated a hefty breakup fee to the tune of $2 billion.
Microsoft detailed the Activision Blizzard acquisition in June, vowing to continue releasing popular franchises such as Call of Duty on competing platforms. While the deal already won approval from some countries like Brazil, the EC's probe was predicted to be its main regulatory roadblock from the moment the two parties announced their intents to merge. Should the transaction go through, Microsoft would also seize control of Candy Crush developer King.
The company's largest platform rival, Sony, has already criticized the proposed acquisition on antitrust grounds. But as far as other major publishers are concerned, some of them appear to be quite receptive to the idea. E.g., Take-Two believes the deal will benefit the industry, with its CEO saying as much earlier this month.
Source: European Commission