Authored By: Amal Salaheldin Mustafa Fadlalla
Arab Academy for Science, Technology and Maritime Transport
INTRODUCTION
When a dominant technology company acquires a major business, should competition authorities focus on the immediate effects of the transaction or also consider its potential long-term consequences for competition? The proposed acquisition of Activision Blizzard by Microsoft demonstrates the complexity of this question. In November 2022, the European Commission opened an in-depth investigation into the transaction, expressing concerns that it may reduce competition in the markets for the distribution of console and personal computer (PC) video games and for PC operating systems.1
The commission ultimately approved the acquisition subject to specific commitments, which raises a broader question of whether behavioral remedies are sufficient to prevent competition risks that may result from these mergers or acquisitions. The commission identified some concerns that were suggested in the initial investigation, one of them was that Microsoft may have the ability as well as a potential economic incentive to engage in foreclosure strategies. It examined how Microsoft could use Activision Blizzard’s valuable games in other markets. The commission also considered that Microsoft could be able to limit cloud-gaming providers’ access to Activision Blizzard’s games, which may raise barriers for other competitors.2 Therefore, this transaction may result in difficulty in digital merger control: The danger of a digital acquisition is not only that a competitor disappears. The acquiring company can also use what it acquired to expand its power into another related market. This may result in strengthening its dominant position.
This article argues that the European Union merger control framework provides the Commission with substantial tools to address such risks, but the effectiveness of those tools relies heavily on the suitability of the remedy, meaning not every remedy will work with every merger. Behavioral remedies may be effective in some cases but they may not be sufficient in others, it may also preserve competition where the principal concern is the future conduct of the merged undertaking, however, structural remedies, including divestiture, may provide a more durable means of restoring competition.3
The article first examines the EU merger-control framework and the legal standard governing concentrations. It then analyses the Commission’s assessment of Microsoft/Activision Blizzard, before distinguishing behavioral from structural remedies. The final part evaluates whether the approach adopted in the case provides an adequate model for future digital acquisitions and considers when stronger structural intervention may be justified.
EU MERGER CONTROL FRAMEWORK
Legal Standard
EU merger control is mainly governed by Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings (‘EUMR’). The main test is whether a merger or acquisition would significantly reduce effective competition in the internal market, or a substantial part of it, particularly where it creates or strengthens a dominant position.4 Therefore, the Commission is mainly concerned with how the transaction may affect competition, rather than simply looking at how large the companies involved are.
Under the EUMR, the Commission has several possible outcomes. If the transaction does not raise serious competition concerns, it can be approved. If there are concerns but these can be addressed through commitments offered by the parties, the Commission can approve the transaction subject to those commitments. However, if the competition concerns cannot be adequately addressed and the transaction would significantly impede effective competition, the Commission can prohibit it.5 This is particularly important in digital markets, where the Commission has to consider not only whether the transaction could harm competition, but also whether the proposed remedies would actually prevent that harm.
The Commission’s Remedies Notice gives further guidance on the types of remedies that can be used. It distinguishes between structural remedies, such as divestitures, and behavioral remedies, which control how the merged company acts after the transaction. The Commission generally considers divestitures to be the most effective way of dealing with competition concerns caused by horizontal overlaps. They can also be used in some vertical or conglomerate cases. Behavioral commitments, on the other hand, are approached more cautiously and are normally accepted only where they can be properly implemented and monitored.6
This distinction is especially important in digital markets. A behavioral remedy allows the merged company to continue operating but places limits on how it can behave. A structural remedy, by contrast, changes the structure of the market itself. The main issue is therefore whether competition can be protected by controlling the behavior of the merged company, or whether the transaction has created a structural problem that requires a more direct solution.
B. The Particular Challenge of Digital Acquisitions
Digital markets can be more difficult to assess because competition is not always reflected by traditional measures such as market share. Factors such as network effects, economies of scale, data, digital ecosystems and innovation can allow a company with a large existing user base to strengthen its position in related markets.7 Academic research has also raised concerns about large companies acquiring smaller or potential competitors before they become serious threats. This is often referred to as ‘killer acquisitions’.8
However, this does not mean that every acquisition by a large technology company is anti-competitive. Acquisitions can also have positive effects, such as improving products, encouraging innovation, and giving consumers more choice. The main challenge for competition authorities is therefore to distinguish between acquisitions that provide genuine economic benefits and those that may seriously weaken competition. This means that authorities need to look not only at the current state of the market, but also at how the transaction could realistically affect competition in the future.
III. MICROSOFT/ACTIVISION BLIZZARD: A CASE STUDY
A. The Commission’s Competition Concerns
Microsoft notified the European Commission of its proposed acquisition of Activision Blizzard on 30 September 2022. On 8 November 2022, the Commission opened an in-depth investigation. One of its main concerns was that Microsoft could restrict rival providers of console and PC games from accessing Activision Blizzard’s games. The Commission considered this particularly important because Activision Blizzard’s games could be important for the development of cloud game-streaming services. It also raised concerns about the possible impact of the transaction on rival providers of PC operating systems.9
After its in-depth investigation, the Commission focused mainly on cloud game streaming and the relationship between Activision Blizzard’s games and Microsoft’s Windows operating system. It considered that Microsoft would have both the technical and contractual ability to prevent rival cloud-streaming services from accessing Activision Blizzard’s games and could instead make them available exclusively through Microsoft’s Game Pass Ultimate service.10 The Commission also considered that popular games were important for cloud-streaming services and that rival providers might not have enough time or effective strategies to respond if Microsoft made these games exclusive.
The Commission also identified a concern relating to Microsoft’s Windows operating system. It considered that Microsoft could use the cloud streaming of Activision Blizzard’s games to make Windows more attractive compared with other PC operating systems.11 This is important because the concern was not simply that Microsoft and Activision Blizzard were direct competitors. Instead, it came from the way their different products and services could work together within the wider digital ecosystem.
B. The Remedies and the Commission’s Decision
The Commission did not ultimately prohibit the acquisition. Instead, Microsoft offered commitments during the Phase II investigation. The final commitments included two main elements. First, consumers in the European Economic Area would have the right to stream eligible Activision Blizzard games through cloud-streaming services of their choice. Second, eligible streaming providers would receive a royalty-free license to stream those games.12 These commitments were intended to prevent Microsoft from restricting rival cloud-streaming services from accessing Activision Blizzard’s content.
The commitments would apply for ten years and included additional protections relating to access to the games and the use of application programming interfaces. The Commission tested different versions of the commitments through market testing before deciding that the final package was sufficient to address the competition concerns identified during the investigation.13 On 15 May 2023, the Commission therefore declared the acquisition compatible with the internal market and the EEA Agreement, subject to Microsoft fully complying with the commitments.14
The decision is important because it shows that the Commission did not consider the acquisition itself to be automatically incompatible with EU competition law. Instead, it found that the main competition concerns could be addressed through specific commitments. The case therefore provides a useful example for considering whether behavioral remedies can effectively protect competition in fast-changing digital markets.
IV. BEHAVIOURAL AND STRUCTURAL REMEDIES: A CRITICAL ANALYSIS
A. The Case for Behavioral Remedies
Behavioral remedies can be useful when the competition concern relates to a specific type of conduct that can be clearly identified in advance. In Microsoft/Activision Blizzard, the Commission was concerned that Microsoft could restrict rival cloud-streaming services from accessing Activision Blizzard’s games. The licensing commitment directly addressed this concern by requiring access to the relevant content.15 This allowed the acquisition to go ahead while still protecting access for competing services.
Behavioral remedies can also be less disruptive than divestiture. A structural remedy may require the parties to separate assets that could create efficiencies when they are combined. A licensing obligation, on the other hand, can allow the merged company to keep some of the benefits of integration while limiting its ability to prevent competitors from accessing important content. This can be particularly useful in digital markets, where combining technologies and services can provide genuine benefits for consumers.
However, behavioral remedies also create ongoing obligations for the merged company. Their success depends on clear drafting, effective monitoring, and enforcement. The Commission’s Remedies Notice recognizes this problem, explaining that non-divestiture remedies can be difficult to monitor and may therefore only be accepted in exceptional circumstances.16 This difficulty can be even greater in digital markets because technology, products and business models can change faster than the remedy itself.
B. The Case for Structural Remedies
Structural remedies deal with competition concerns by changing the structure of the market rather than controlling the future behavior of the merged company. Divestiture can create or strengthen an independent competitor and may therefore provide a more lasting solution to certain competition concerns. The Commission’s Remedies Notice considers divestiture to be the preferred remedy in many situations and uses it as an important benchmark when assessing other types of remedies.17
The main advantage of divestiture is therefore its durability. Once a viable business is transferred to a suitable purchaser, the competitive asset is no longer controlled by the merged company.
This can reduce the need for constant monitoring and also reduce the possibility of the merged company finding technical or commercial ways around the behavioral obligations.
However, structural remedies are not always the better option. Divestiture can be difficult when the assets needed to create an effective competitor are closely connected to the acquiring company. Separating a business from the technology or infrastructure it depends on, could result in a weaker competitor rather than restoring effective competition. The Commission therefore emphasizes that a divested business must be viable and able to compete effectively on a lasting basis.18 Structural remedies can therefore create their own problems and must be designed according to the specific competition concern involved.
C. Where Should the Line Be Drawn?
The Microsoft/Activision Blizzard case suggests that the decision should not be based simply on the size of the acquiring company. Large technology companies can still lawfully acquire other businesses where the transaction creates efficiencies and does not significantly harm competition. The more important question is whether the acquisition gives the company the ability and incentive to restrict competitors, remove an important competitive constraint or strengthen its market power across connected digital markets.
Another important factor is whether the proposed remedy is practical. If a behavioral commitment can be clearly defined, properly monitored and effectively enforced, it may be reasonable to allow the transaction to proceed. However, if the remedy requires constant monitoring of complex technological behavior, relies on information that regulators or competitors cannot easily access, or may become difficult to apply as the market changes, a structural remedy may be more appropriate.
This distinction also helps to separate merger control from private enforcement. Private damages claims may provide a remedy for harm caused by anti-competitive behavior, but they cannot replace effective merger control when the concern is that the transaction itself could change the structure of the market. Merger control aims to prevent serious harm to competition before it becomes established. Therefore, the main question should not be whether affected parties could eventually seek compensation through private litigation, but whether the merger remedy can protect effective competition from the beginning.
At the same time, the approach should remain proportionate. Treating every acquisition by a large technology company as automatically harmful could discourage investment and innovation. Similarly, automatically favoring divestiture would not fit well with the case-by-case approach required under EU merger control. A better approach is for the Commission to consider the durability, monitorability and ability of each proposed remedy to preserve competition in relation to the specific theory of harm identified in the transaction.19
V. COMPARATIVE PERSPECTIVE: THE EU AND THE UNITED STATES
A comparison with the United States shows that the same transaction can lead to different regulatory outcomes. US authorities also examined Microsoft’s acquisition of Activision Blizzard, but the legal and institutional systems are different. The Federal Trade Commission (FTC) attempted to block the acquisition, while the US District Court for the Northern District of California rejected the FTC’s request for a preliminary injunction, allowing the transaction to proceed.20
This comparison is useful not because one system is necessarily better than the other, but because it shows how difficult it can be to predict the future effects of digital acquisitions. The EU ultimately accepted licensing commitments as sufficient to address its concerns, while the US case focused more directly on whether the acquisition should be stopped. This difference shows the importance of choosing an appropriate remedy. When competition authorities identify a real risk to competition, the key question may be whether that risk can be effectively addressed without stopping the transaction completely.
The experience of both jurisdictions therefore supports a cautious but flexible approach in the EU. Competition authorities should be prepared to use structural remedies where behavioral commitments cannot adequately protect competition. At the same time, divestiture should not automatically be required simply because a large technology company is making an acquisition.
VI. CONCLUSION
The Microsoft/Activision Blizzard acquisition shows the increasingly complex relationship between corporate acquisitions and competition in digital markets. The main concern was not simply that Microsoft would become a larger company, but that it could use control over Activision Blizzard’s valuable games to strengthen its position in related markets, particularly cloud game streaming and PC operating systems.21
The EU merger-control framework is flexible enough to address these types of concerns. The EUMR allows the Commission to approve transactions subject to commitments, while the Remedies Notice provides guidance on the use of both behavioral and structural remedies. The Commission’s decision in Microsoft/Activision Blizzard shows how behavioral commitments can protect access to important content while still allowing the acquisition to go ahead.22
However, behavioral remedies should not become the automatic solution for every digital merger. Their effectiveness depends on whether they can be properly monitored and enforced over time. Where a transaction creates a more serious structural threat to competition, and behavioral commitments cannot reliably protect the competitive conditions that existed before the transaction, divestiture or another structural remedy may be more suitable. The main question should therefore be whether the remedy can protect effective competition in a practical and lasting way, rather than simply whether it is the least restrictive option.
Ultimately, the distinction between a lawful acquisition and anti-competitive consolidation should be assessed on a case-by-case basis. The EU should maintain the flexibility of its merger-control system while giving greater attention to how durable and practical proposed remedies will be in digital markets. Microsoft/Activision Blizzard shows that behavioral commitments can be effective in the right circumstances, but it also demonstrates why the Commission must be willing to consider stronger structural remedies where commitments are not enough to protect competition.
REFERENCES AND BIBLIOGRAPHY
Legislation and EU Instruments
Consolidated Version of the Treaty on the Functioning of the European Union [2016] OJ C202/47.
Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings [2004] OJ L24/1.
Commission Notice on remedies acceptable under Council Regulation (EC) No 139/2004 and under Commission Regulation (EC) No 802/2004 [2008] OJ C267/1.
Cases and Decisions
Case M.10646, Microsoft/Activision Blizzard, Summary of Commission Decision of 15 May 2023 [2023] OJ C285/8.
FTC v Microsoft Corp, 681 F Supp 3d 1069 (ND Cal 2023).
Secondary Sources
Argentesi E and others, ‘Merger Policy in Digital Markets: An Ex Post Assessment’ (2021) 17(1) Journal of Competition Law & Economics 95.
Decarolis F and others, ‘Digital Mergers: Recent Insights and Policy Implications’ (2026) 73 Information Economics and Policy 101174.
Ioannidou M, ‘Mergers and Acquisitions’ in Competition Law and Policy in Digital Markets: A Comparative Analysis of the EU and China (Oxford University Press 2025) 239.
Organisation for Economic Co-operation and Development, ‘Theories of Harm for Digital Mergers’ (Roundtable, 16 June 2023).
Witt AC, ‘Big Tech Acquisitions: The Return of Conglomerate Merger Control?’ (2020) SSRN.
Ziermann F, ‘Assessing the World’s Largest Gaming Acquisition under EU Competition Law’ (2023) 14(4) Journal of European Competition Law & Practice 203.
1 European Commission, ‘Mergers: Commission Opens In-Depth Investigation into the Proposed Acquisition of Activision Blizzard by Microsoft’ (Press Release IP/22/6578, 8 November 2022) https://ec.europa.eu/commission/presscorner/detail/en/ip_22_6578 .
2 Microsoft/Activision Blizzard (Case M.10646) Commission Decision of 15 May 2023, paras 24–32.
3 Commission Notice on remedies acceptable under Council Regulation (EC) No 139/2004 and under Commission Regulation (EC) No 802/2004 [2008] OJ C 267/1, paras 16–17.
4 Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings [2004] OJ L 24/1, art 2(2)–(3).
5 Ibid arts 6(1), 6(2), 8(1)–(3).
6 Commission Notice on remedies acceptable under Council Regulation (EC) No 139/2004 and under Commission Regulation (EC) No 802/2004 [2008] OJ C 267/1, paras 16–17, 22, 61, 69.
7 Maria Ioannidou and Bingwan Xiong, Competition Law and Policy in Digital Markets: A Comparative Analysis of the EU and China (Oxford University Press 2025) ch 6.
8 Elena Argentesi and others, ‘Merger Policy in Digital Markets: An Ex-Post Assessment’ (2021) 17 Journal of Competition Law & Economics 95, 113–15.
10 Microsoft/Activision Blizzard (Case M.10646) Commission Decision of 15 May 2023, paras 28–32.
11 Ibid paras 33–38.
12 Ibid paras 40–45.
13 Ibid paras 40–53.
14 Ibid paras 52–55
15 Ibid paras 41– 45
17 Commission Notice on remedies acceptable under Council Regulation (EC) No 139/2004 and under Commission Regulation (EC) No 802/2004 [2008] OJ C 267/1, paras 22, 61.
18 Ibid paras 23–24
19 Ibid paras 16–17, 61, 69.
FTC v Microsoft Corp, 681 F Supp 3d 1069 (ND Cal 2023).
