By Mark McSherry

The European Union has approved Microsoft Corp.’s $69 billion proposed takeover of Activision Blizzard Inc — just weeks after the UK’s Competition & Markets Authority (CMA) announced a decision to block the gaming industry’s biggest ever deal.

The EU approval could prompt Chinese and Korean regulators to do the same, despite the UK’s veto of the deal.

However, Microsoft still faces a battle to clinch the Activision Blizzard takeover.

It has until May 24 to appeal a decision by the UK regulator to block it. A final decision could take months.

The US Federal Trade Commission’s case against the deal is also pending at that agency.

The EU said that to address competition concerns identified by the European Commission in the market for the distribution of PC and console games via cloud game streaming services, Microsoft offered the following comprehensive licensing commitments, with a 10-year duration:

• A free license to consumers in the EEA that would allow them to stream, via any cloud game streaming services of their choice, all current and future Activision Blizzard PC and console games for which they have a license.
• A corresponding free license to cloud game streaming service providers to allow EEA-based gamers to stream any Activision Blizzard’s PC and console games.

“The approval is conditional on full compliance with the commitments offered by Microsoft,” said the European Commission.

“The commitments fully address the competition concerns identified by the Commission and represent a significant improvement for cloud gaming as compared to the current situation.

“Today’s decision follows an in-depth investigation of the proposed acquisition of Activision by Microsoft.

“As always, the Commission has based its decision on hard evidence, and on extensive information and feedback from competitors and customers, including from game developers and distributors as well as cloud game streaming platforms in the EU.”

EU competition chief Margrethe Vestager said: “Video games attract billions of users all over the world. In such a fast-growing and dynamic industry, it is crucial to protect competition and innovation.

“Our decision represents an important step in this direction, by bringing Activision’s popular games to many more devices and consumers than before thanks to cloud game streaming.

“The commitments offered by Microsoft will enable for the first time the streaming of such games in any cloud game streaming services, enhancing competition and opportunities for growth.”

The UK’s Competition & Markets Authority responded to the news by saying: “The UK, US and European competition authorities are unanimous that this merger would harm competition in cloud gaming.

“The CMA concluded that cloud gaming needs to continue as a free, competitive market to drive innovation and choice in this rapidly evolving sector.

“Microsoft’s proposals, accepted by the European Commission today, would allow Microsoft to set the terms and conditions for this market for the next 10 years.

“They would replace a free, open and competitive market with one subject to ongoing regulation of the games Microsoft sells, the platforms to which it sells them, and the conditions of sale.

“This is one of the reasons the CMA’s independent panel group rejected Microsoft’s proposals and prevented this deal.

“While we recognise and respect that the European Commission is entitled to take a different view, the CMA stands by its decision.”

Microsoft President Brad Smith said: “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.”

Activision CEO Bobby Kotick said the European Commission “conducted an extremely thorough, deliberate process to gain a comprehensive understanding of gaming …

“As a result, they approved our merger with Microsoft, although they required stringent remedies to ensure robust competition in our rapidly growing industry.”