The European Commission today announced the results of its preliminary investigation into Microsoft's proposed acquisition of Activision Blizzard, saying its findings have justified launching an in-depth investigation into the competitive effects of the deal.
"The Commission's preliminary investigation shows that the transaction may significantly reduce competition on the markets for the distribution of console and PC video games, including multi-game subscription services and/or cloud game streaming services, and for PC operating systems," it said.
"In particular, 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."
Specifically, the Commission said it was worried that Microsoft would keep Activision Blizzard games off of rival consoles, or "degrading the terms and conditions for their use of or access to" those games on other consoles.
It was also concerned about the impact the deal could have on competition in the subscription and cloud-streaming markets, as well as furthering Microsoft's hold on PC operating systems by ensuring Activision Blizzard games were only distributed through Windows operating systems.
The Commission has a March 23 deadline to conduct its in-depth investigation and issue a decision.
Activision Blizzard CEO Bobby Kotick addressed the decision in a letter to employees that was released on the company's investor relations site. He noted that the regulatory approval process for the deal is proceeding as expected, and touted the approval of the deal from Brazilian regulators.
"We will continue to cooperate with the European Commission where, in the countries they represent, we have many employees," Kotick said.
"We have been working closely with Microsoft to actively engage regulators in other key countries to answer their questions and provide them with information to assist with their review. People from across our business units and functions have been involved in this regulatory work, and I want to thank each of you for your tireless work and commitment to completing this merger, which we continue to expect to close in Microsoft's current fiscal year ending June 2023."
The US Federal Trade Commission and UK Competition and Markets Authority are among the regulators worldwide who have yet to approve the deal.