European regulators have given the green light to Microsoft’s acquisition of gaming giant Activision Blizzard, but analysts warn that the deal is far from finalized.

The EU approved the $69 billion (€63 billion) acquisition after Microsoft agreed to several pro-competitive measures. Notably, the company promised to automatically license popular Activision Blizzard games, such as Dutyto match cloud gaming Services.

“The commitments made by Microsoft will make it possible for the first time to stream such games on any cloud game streaming service, increasing competition and growth opportunities,” said Margrethe Vestager, the EU’s antitrust czar.

With our 🇪🇺 clearance #Activation Blizzard’s games will also be available in the cloud. This is good for competition and innovation and brings games to many more devices and consumers. #Microsoft‘s commitments will enable game streaming on any cloud game streaming service. https://t.co/DpcaRpiV7X

— Margrethe Vestager (@vestager) May 15, 2023

The decision comes just weeks after UK regulators vetoed what would be the biggest deal ever for the games industry. The Competition and Markets Authority’s (CMA) shake-up sparked fears that the takeover would collapse.

The EU’s approval has revived optimism at Microsoft, but the merger still faces major hurdles.

The CMA’s ruling can still be applied globally – and the regulator is standing firm. After the EU ruling, the authority redoubled its position.

Sarah Cardell, CEO of the CMA, warned that Microsoft’s proposals would affect the market conditions over a decade.

“They would replace a free, open and competitive market with one subject to constant regulation of the games Microsoft sells, the platforms it sells them to and the terms of sale,” she said.

“This is one of the reasons why the CMA’s independent panel group rejected Microsoft’s proposals and prevented this deal. While we recognize and respect that the European Commission has the right to take a different position, the CMA stands by its decision.”

This is one of the reasons why the CMA’s independent panel group rejected Microsoft’s proposals and prevented this deal.

While we recognize and respect that the European Commission has the right to take a different position, the CMA stands by its decision.

[5/5]

— Competition and Markets Authority (@CMAgovUK) May 15, 2023

However, the UK is part of a shrinking minority. After the decision of the EU the deal has received approval an estimated 37 countries with a combined population of more than 900 million.

Many analysts now doubt that the UK will avoid closing the deal. Microsoft is appealing the CMA’s decision and the UK government appears resist the position of the regulator.

Critics have also questioned the CMA’s antitrust argument. Mark Long, former Microsoft Xcloud program manager and CEO of AAA shooter Shrapnelis confident in the prospects for his former employers.

“Ultimately I think they win on appeal…because [Xbox head] Phil Spencer wants Xcloud on every platform he can get a deal on, including Playstation and Switch,” Long told TNW. “Hard to argue that this is bad for consumers.”

Yet Microsoft is also being scrutinized closer to home. In the US, the Federal Trade Commission has filed a lawsuit to block the acquisition. The impending trial is unlikely to reach a decision before the end of the year.

Gareth Mills, partner at law firm Charles Russell Speechlys, warns that Microsoft’s path to approval remains treacherous. He notes that the EU’s approval is only conditional – and that there are further challenges ahead.

“The picture is therefore more complex than a binary ‘approval/rejection’ from the respective regulators that supporters of the deal try to imply,” Mills told TNW.

“The saga is unlikely to come to an end anytime soon a legal complaint refiled in California courts last week by gamers seeking an injunction, as well as Microsoft’s announced appeal of the CMA’s decision and the US Federal Trade Commission’s case against the acquisition also pending.