EU Regulators to Review Microsoft’s Remedies for UK Watchdog

The E.U. antitrust watchdog is seeking views on Microsoft’s (MSFT.O) rivals and customers and whether they are affected by the U.S. tech giant’s proposals to gain U.K. approval for its $69 billion acquisition of Activision Blizzard (ATVI.O), sources close to the matter said. The E.U. regulators are trying to get to the bottom of whether Microsoft’s remedy offers, including a commitment to make Activision games available on third-party cloud gaming platforms in Europe, will address its concerns over the deal’s impact on the market for P.C., console and multi-game subscription services.

The European Commission’s decision to clear the deal puts it at loggerheads with Britain’s Competition and Markets Authority, which blocked the biggest gaming deal in history last month. The CMA was concerned that the purchase would mean Microsoft had too much power over the cloud gaming services market, undermining gamers’ innovation and choice. Microsoft offered a remedy to the deal that included a promise to make all of its future P.C. and console games available for customers to stream on the platform of their choice in Europe, as well as a one-off payment to Ubisoft to buy back the rights to sell those games to consumers.

But, the CMA is skeptical that this is enough to address its concerns. It has started a new phase one investigation into the acquisition and has asked to speak to competitors, game developers, and other interested parties. “We remain convinced that Microsoft’s proposal does not sufficiently address our concern that the acquisition of Activision Blizzard could lead to a significant lessening of competition in the market for cloud gaming services,” a spokesperson for the CMA said.

Microsoft could appeal the CMA’s decision to a particular competition tribunal, which can take months to hear. But it will need to show that the CMA acted “irrationally, illegally or with procedural impropriety or unfairness,” says a lawyer with Linklaters. That would be difficult, as the CMA has won around 67 percent of merger appeals since 2010.

The dispute over the Activision Blizzard deal is just the latest regulatory headache for Microsoft in Europe. It is also facing a probe over its bundled software products, including Teams work messaging software in the Office and Outlook clients. It faces a lawsuit over contractual terms that arguably lock customers into its Azure cloud hosting service, competing with Amazon Web Services. That lawsuit could be the first time the CMA has sued a Big Tech company for antitrust violations. That could set a new tone for antitrust enforcement in the world’s largest economy.

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