EU Approves 'MS Big Deal'... Is a New Phase of US Big Tech Regulation Coming?

European Union (EU) authorities are expected to conditionally approve Microsoft's (MS) acquisition of Activision Blizzard. Amid prolonged scrutiny by overseas regulatory authorities over 'MS's big deal,' a positive sentiment has emerged as one uncertainty has been resolved. Attention is focused on whether this could also curb the U.S.'s expanding regulatory attempts against monopolistic structures formed through competitor mergers and acquisitions (M&A).

On the 2nd (local time), major foreign media outlets cited sources reporting that MS is likely to receive approval from EU regulators for the acquisition of Activision Blizzard by offering licenses for the popular game 'Call of Duty' to competitors.

Sources said the EU Commission, which plans to decide on the approval of MS's acquisition of Activision Blizzard by the 25th of next month, is unlikely to demand asset divestitures similar to those required by the UK regulatory authorities. Previously, the UK's Competition and Markets Authority (CMA) proposed separating and selling Activision Blizzard's publishing and entertainment divisions as a condition for approval.

They forecast that MS may present additional measures to ease concerns of parties involved in the acquisition beyond licensing agreements for competitors, but explained that such measures are typically adopted by acquiring companies in the course of business.

Brad Smith, MS's Chief Legal Officer, stated last month that while they would offer licensing agreements to address competitors' concerns, they would not sell the highly profitable 'Call of Duty' business rights.

He emphasized that removing or separating a single game or some parts of the business from Blizzard is not feasible.

Regarding this, MS said it is doing its best to devise effective and easily implementable solutions to address the EU's concerns. An MS spokesperson claimed, "The commitment to provide Sony, Steam, Nvidia, and others with 100% equal access to Call of Duty in the long term will protect the benefits for gamers and developers resulting from the acquisition and strengthen competition within the market."

Earlier last month, MS announced a 10-year licensing agreement with Nintendo and Nvidia to offer Call of Duty on their gaming platforms, contingent upon approval of the Blizzard acquisition.

Shares of Activision Blizzard, listed on the U.S. Nasdaq market, rose 2.63% by the end of the trading session as buying interest surged following news of the EU regulatory authorities' likely approval.

Even if MS receives the EU's final approval for the acquisition as expected, many hurdles remain. The stances of U.S. and UK regulators are tougher. The U.S. Federal Trade Commission (FTC) filed a lawsuit last December to block the acquisition.

Alongside Apple, Google, Amazon, and Meta, MS has become a target of antitrust regulations pushed by the Joe Biden administration and Congress. The FTC has filed antitrust lawsuits against both companies to prevent the merger. The FTC views MS's acquisition of Activision Blizzard as a strategic move to secure gaming intellectual property (IP) and establish a monopoly in the game distribution market.

In the lawsuit, the FTC cited MS's past conduct when acquiring ZeniMax Media, where MS allegedly blocked and pressured competitors from supplying games, arguing that MS's control over Activision Blizzard's IP could hinder competition in quality, price, and innovation. MS has responded to the FTC's lawsuit with objections rather than remedies, escalating the legal battle into a full-scale confrontation.

Having enjoyed a monopoly position in the PC market, MS entered the console gaming market late in 2001 and has rapidly increased its market share by expanding its scale and competitiveness. If MS's $68.7 billion (approximately 86.63 trillion KRW) acquisition of Activision Blizzard is finalized, MS will stand tall as one of the global top three gaming companies alongside China's Tencent and Japan's Sony.