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European Regulators Open 'In-Depth Investigation' into Activision Blizzard, Microsoft Acquisition

The companies have hit another snag in gaming’s most valuable merger and acquisition deal.

The European Commission has opened an “in-depth investigation” into Microsoft’s $68.7 billion acquisition of Activision Blizzard, citing concerns around how Microsoft’s ownership of the game publisher could destabilize the gaming industry and the balance between developers and console manufacturers.

“The Commission is concerned that, by acquiring Activision Blizzard, Microsoft may foreclose access to Activision Blizzard's console and PC video games, especially to high-profile and highly successful games [so-called ‘AAA' games] such as ‘Call of Duty',” the Commission said in a press release.

The Commission cited concern that Microsoft may close off access to those games, especially as it continues to invest further into its game subscription services, Xbox Game Pass and Xbox Game Pass for PC, and its cloud service, Xbox Cloud.

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While Microsoft and Xbox’s chief executive, Phil Spencer, has routinely made commitments to keep “Call of Duty” on PlayStation consoles, he has expressed interest in bringing the franchise to Game Pass. But a document disclosed in a U.K. antitrust probe revealed that Activision Blizzard holds an agreement with Sony that prevents the distribution of “Call of Duty” on Game Pass, at least in the short term.

The European Commission has set a March 23, 2023, deadline to make a decision based on the investigation’s findings.

The European Commission is the second regulator in Europe to open inquiries into the Microsoft-Activision Blizzard deal. The U.K.’s Competition and Markets Authority (CMA) is also pushing for a second stage in its investigation, citing similar concerns to the commission.

Since Microsoft announced the acquisition in January, Sony has been on the offensive against the deal. PlayStation CEO Jim Ryan flew to Brussels to meet with commission regulators in early September, according to a Dealreport report. Microsoft has grown increasingly frustrated with Sony’s meddling and with an October filing to the CMA.

“[The CMA] adopts Sony’s complaints without considering the potential harm to consumers,” Microsoft said in a response to the U.K. inquiry in October, according to The Verge’s Tom Warren.

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In a recent interview, Spencer said that Microsoft anticipates the deal to close before the end of its 2023 fiscal year, which ends in June 2023. It is waiting for a ruling from the U.S.’s Federal Trade Commission, which may come by late November, according to a report from Seeking Alpha.

If the deal goes through, it will mark the largest gaming deal in history, at a time of mass consolidation around the industry and a fraught time for Activision Blizzard. The company has been under fire in a series of legal battles for alleged sexual harassment and is a subject of a Department of Justice investigation into its esports leagues.