C 285/12
EN
Official Journal of the European Union
14.8.2023
(27)
Activision Blizzard does not license its games to cloud game streaming services at the time of the decision.
However, the Commission considers, primarily based on Activision Blizzard’s internal documents, that absent the Transaction Activision Blizzard would have likely started to license its games to cloud game streaming services, in particular those based on a buy-to-play business model (i.e., those platforms that allow users to stream games that they have already purchased from a digital storefront).
(28)
Considering the above, the Commission finds that Microsoft would have the ability to engage in a successful foreclosure strategy against rival cloud game streaming services, by making Game Pass Ultimate the only cloud game streaming service offering Activision Blizzard’s games.
The Commission finds that Activision Blizzard’s games are an important input for cloud game streaming services, and therefore Activision Blizzard has market power in the development and publishing of console games.
The Commission notes that the parties’ combined market share by revenue in 2022 in the development and publishing of console and PC video games is below the 30 % threshold.
However, the parties’ share is higher in some possible narrower segments, especially when focusing on genres such as role-playing in the EEA and shooter games on a worldwide basis, and when looking at other metrics such as monthly active users or game-time.
In this regard, role-playing and shooter games are particularly engaging and popular, and Activision Blizzard provides some of the most successful games in these genres, such as Call of Duty and World of Warcraft.
(29)
Post-Transaction, Microsoft would have the technical and contractual ability to withhold Activision Blizzard’s games from rival cloud game streaming services, and to release them for streaming exclusively via Game Pass Ultimate.
In this case, rival cloud game streaming services would not have timely and effective counter-strategies.
This is primarily because a large catalogue of popular content is key for their ability to compete, and PC and console games from other publishers would not be a satisfactory alternative to build a catalogue of games adequate to for third-party cloud gaming services to compete against Game Pass Ultimate, should the latter offer Activision Blizzard’s games with exclusivity.
(30)
The Commission also considers that Microsoft would have the incentive to foreclose rival distributors of PC and console games via cloud game streaming services.
This is primarily because, given the high popularity of Activision Blizzard’s games, a foreclosure strategy would increase the number of gamers using Game Pass Ultimate’s cloud game streaming feature.
Such increase would likely be significant, also thanks to the characteristics of Microsoft’s activities, which combine cloud game streaming services, subscription services and the Windows PC OS amongst others.
The Commission considers that the losses from such foreclosure strategy would be limited compared to the gains.
(31)
Finally, the Commission considers that the effects of a foreclosure strategy on competition in the distribution of PC and console games would be significant.
Cloud gaming is a rising trend and expected to become an important distribution channel, and a foreclosure strategy would raise barriers to entry or expansion of rival cloud game streaming services, which are generally not vertically integrated and would have to rely on a smaller pool of independent publishers.
Furthermore, while cloud gaming is relatively small compared to the overall market, it is expected to increase significantly, and it is an important source of innovation.
(32)
Therefore, the Commission considers that the Transaction would significantly impede effective competition in the market for the distribution of PC and console games as a result of the merged entity withholding Activision Blizzard’s games from rival cloud game streaming services.
4.3.
Conglomerate effects
(33)
The Transaction gives rise to conglomerate links between Activision Blizzard’s games and Microsoft’s supply of the Windows PC OS.
More specifically, the Commission considers, based on the results of the market investigation, that Microsoft would have the ability, post-Transaction, to foreclose rival providers of PC OS by tying the cloud game streaming of Activision Blizzard’s PC and console games to Windows.