Before we dive in, let’s take a trip down memory lane. Back in 1958, physicist William Higinbotham invented the first video game, ‘Tennis for Two’, as a way to entertain visitors at the Brookhaven National Laboratory. Fast forward to 2023, we’re talking about video games being streamed over the cloud, a concept that Higinbotham could only dream of.
Microsoft, the Redmond-based tech titan, is widely known for its diverse range of services, including the Xbox gaming console and the ubiquitous Windows operating system. Activision, on the other hand, is a gaming powerhouse responsible for mega-hits like Call of Duty, World of Warcraft, and Diablo.
The European Commission’s primary concern with this merger was the potential of Microsoft using its enhanced position to harm competition in cloud game streaming and PC operating systems. These concerns harken back to the anti-competitive practices of Standard Oil in the early 20th century, which led to the company’s eventual breakup.
However, the Commission found that Microsoft had no incentive to stop distributing Activision’s games via Sony’s PlayStation, given the console’s immense popularity. Even if Microsoft chose to do so, it would not significantly harm competition, as Sony’s robust game catalogue and market position could easily counteract such a move.
The most interesting aspect of this deal is its potential impact on cloud gaming, an innovative market that could revolutionize the gaming industry. Right now, cloud gaming is still a fledgling technology, much like the first stocks traded in the Amsterdam Stock Exchange in the 17th century. Yet, just as those early stocks laid the foundation for the global financial system, cloud gaming has the potential to transform the gaming landscape.
To allay the Commission’s concerns, Microsoft offered comprehensive licensing commitments, enabling consumers to stream Activision’s games via any cloud game streaming service of their choice. This represents a significant leap for cloud gaming and a potential game-changer for smaller players in the EU.
Akin to the Bretton Woods agreement that shaped the post-World War II economic order, Microsoft’s commitments could have a profound impact on the cloud gaming market. They offer the possibility for consumers to play popular Activision games on any platform, thereby boosting competition and potentially accelerating the development of this nascent technology.
While Microsoft’s acquisition of Activision has been approved, the Commission’s decision is conditional upon full compliance with these commitments. As we’ve seen throughout financial history, from the South Sea Bubble to the Great Recession, oversight and regulation play a crucial role in ensuring a fair and competitive market.
As we watch this merger unfold, remember that innovation often comes with growing pains. Just as the first stock exchanges led to speculation and financial crises, the rise of cloud gaming could bring new challenges and opportunities.
So, as we step into this brave new world of cloud gaming, let’s ensure we learn from our past and champion the principles of competition, innovation, and fair play. Stay tuned, pioneers, as we continue to navigate the ever-evolving landscape of finance and technology.
