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The potential for cloud gaming

A step forward for Microsoft’s buying gaming giant Activision Blizzard

Microsoft’s proposed acquisition of gaming giant Activision Blizzard has taken a step forward with the European Commission’s approval of the deal. UK’s competition authority recently strongly objected to the proposal referring to that Microsoft would be too dominating in cloud gaming. US competition authority has also had objections and there will be a US hearing on the case but no date has yet been announced. The proposed deal is described as the largest merger in consumer technology in decades and shows the estimated potential for cloud gaming. 

The EU Commission’s approval is conditional on full compliance with commitments offered by Microsoft. “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”, the Commission says.

The Commission concludes that, with the modifications that Microsoft has committed to, the deal “would no longer raise competition concerns and would ultimately unlock significant benefits for competition and consumers. 

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The Commission’s VP in charge of competition policy, Margrethe Vestager, in a statement 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 authority CMA has objected to Microsoft’s proposed purchase of Activision over concerns the deal would alter the future of the fast-growing cloud gaming market.

Microsoft president Brad Smith in an interview with the BBC said he was “very disappointed” with the CMA’s decision, “but more than that, unfortunately, I think it’s bad for Britain”.

“It does more than shake our confidence in the future of the opportunity to grow a technology business in Britain than we’ve ever confronted before. There’s a clear message here – the European Union is a more attractive place to start a business than the United Kingdom”, Smith said.

Gaming is a fast growing market and the growth is forecasted to continue, especially in the future metaverse. The US competition authority, Federal Trade Commission, recently took the controversial decision to go to court to block Microsoft’s buying Activision Blizzard for USD 69 billion – the company’s biggest acquisition ever.

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FTC thinks Microsoft could harm competition by making Activision games, like globally super popular “Call of Duty”, available only on Microsoft’s Xbox console. Microsoft’s answer is that the deal would expand competition. 

Critics have said the FTC’s position looks politically motivated. FTC’ chair, Lina Khan, appointed in 2021 by president Joe Biden, in an interview with Vox earlier said that when companies don’t face robust competition, or when they’re allowed to just squash out competition, they can become too big to care. 

They can impose all sorts of terms or contractual provisions that really just leave Americans in a position of take it or leave it. And in as much as these products and services, these digital tools, are becoming essential to navigating day-to-day life, we want to make sure that people have choices. They’re not just stuck in place with a company that can do whatever it wants, she told Vox.

Microsoft’s president, Brad Smith, has said “we have been committed since Day One to addressing competition concerns.

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