European Union Will Deliver a Statement of Objections to Microsoft

Key insights

6 takeaways

01
The European Commission is preparing a formal 'statement of objections' regarding Microsoft's proposed $69 billion acquisition of Activision Blizzard.
02
EU regulators will not consider any remedies from Microsoft until the formal statement of objections has been officially delivered.
03
Microsoft aims to finalize the acquisition by July 18, 2023, to avoid either renegotiating the deal or paying a $3 billion separation fee to Activision Blizzard.
04
To address antitrust concerns, Microsoft has signed 10-year agreements to bring Call of Duty to Nintendo and Steam, though Sony has rejected similar offers.
05
The UK’s Competition & Markets Authority has extended its investigation timeline, moving its final report date beyond the original March 1, 2023, deadline.
06
The merger has already received regulatory approval from the governments of Brazil, Saudi Arabia, and Serbia.

Summary

The European Commission is preparing to issue a formal statement of objections to Microsoft regarding its proposed $69 billion acquisition of Activision Blizzard. This regulatory action signifies a critical hurdle in the merger process, as the European Union watchdog intends to outline specific antitrust concerns before considering any potential remedies from the involved parties. The commission’s stance reflects ongoing international scrutiny of the deal, which has already faced complex investigations from regulators in the United Kingdom and the United States.

The primary focus of these regulatory objections centers on the potential for Microsoft to restrict competition by making high-profile titles, such as the Call of Duty franchise, exclusive to the Xbox ecosystem. In an effort to preempt these concerns, Microsoft has pursued 10-year licensing agreements with platforms including Nintendo and Steam, and extended similar offers to Sony, which were declined. Despite these efforts, the European Commission maintains a strict procedural requirement, refusing to evaluate any remedial proposals until the formal statement of objections has been officially delivered.

The timeline for the acquisition remains under pressure, with a target completion date of July 18. Failure to finalize the deal by this deadline would force Microsoft to either renegotiate the terms or abandon the acquisition, incurring a $3 billion separation fee. While the merger has already secured approval from regulators in Brazil, Saudi Arabia, and Serbia, the ongoing investigations in the European Union, the United Kingdom, and the United States continue to dictate the feasibility and structure of the transaction.