The European Commission, the European Union’s executive branch, has approved Microsoft Corp.’s plan to acquire Activision Blizzard Inc. for $68.7 billion.

The decision was made public this morning. The development coincided with a report from Bloomberg that revealed the EU is conducting an informal probe into Azure, Microsoft’s public cloud platform. It’s believed the probe has the potential to turn into a formal antitrust investigation. 

Microsoft announced its plans to buy Activision Blizzard, one of the world’s largest video game developers, early last year. The EU launched an antitrust probe into the transaction shortly thereafter. Last November, officials expanded the probe into a broader, so-called Phase 2 investigation.

In a preliminary report released following the EU’s initial probe, officials determined that the acquisition could hurt the video game console and cloud gaming markets. The multigame subscription service segment is another area where antitrust concerns were identified. Moreover, the investigation determined the deal could unfairly strengthen Windows’ position in the operating system market.

Today’s decision to approve the deal comes after the EU determined that the deal wouldn’t negatively impact the console and multigame subscription markets. Officials did identify potential antitrust issues in the other two segments that the initial antitrust investigation reviewed. However, Microsoft proposed a plan to address those issues that has been accepted by the EU.

The crux of the EU’s remaining antitrust concerns was that, should the acquisition close, Microsoft would have an incentive to make Activision Blizzard games available exclusively on its own cloud gaming service. That would negatively impact competing cloud gaming services.

To address the EU’s concerns, Microsoft has proposed issuing a 10-year software license to the competitors in question. The license would allow rival cloud gaming providers to stream all of Activision Blizzard’s games to their customers. EU consumers, in turn, will likewise receive a free license to stream Activision Blizzard games. 

Microsoft’s plan also addresses the EU’s second major antitrust concern. Officials were worried that, in the event Microsoft would make Activist Blizzard content available exclusively on its cloud gaming service, the company could give Windows an unfair competitive advantage. The EU has concluded that the proposed licensing deal with rival cloud gaming providers removes that possibility.

“Video games attract billions of users all over the world,” said European Commission Executive Vice President Margrethe Vestager. “In such a fast-growing and dynamic industry, it is crucial to protect competition and innovation. Our decision represents an important step in this direction, by bringing Activision’s popular games to many more devices and consumers than before thanks to cloud game streaming.”

Microsoft’s proposed acquisition continues to face regulatory scrutiny elsewhere. The U.S. Federal Trade Commission is suing to prevent the company from buying Activision Blizzard, while the U.K’s antitrust regulator last month moved to block the deal. Moreover, Microsoft’s cloud business has reportedly also drawn scrutiny. 

In conjunction with the EU’s approval of the Activision Blizzard deal today, Bloomberg reported that the bloc is conducting a separate probe into Azure. Officials are said to have collected input from multiple Microsoft rivals and customers in connection with the probe. According to Bloomberg, the EU is seeking to determine whether Microsoft misused its access to the sensitive business information of “cloud firms it has commercial dealings with.”

It’s believed the probe may potentially turn into a formal investigation in the future.

Microsoft faced a similar situation last year. In April 2022, reports emerged that the EU began reviewing whether Microsoft had made it overly expensive to run its software on rival cloud platforms’ infrastructure. At the time, it was expected the probe may turn into a formal investigation.

A few months after the report, Microsoft agreed to change its software usage terms in the EU to address regulators’ concerns. The company made it easier for customers to move their licenses between cloud platforms. It also updated the licensing terms of Windows Server and the Microsoft 365 productivity suite. 

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