• EA deal would further increase Saudi presence in esports
• PIF financing considered in FSR context
• Cultural concerns exist despite artistic autonomy reassurances

European game developers might raise regulatory issues tied to the takeover of Electronic Arts (EA), including on the foreign subsidy and merger control fronts, according to a source familiar with the matter.

The industry is focused on the impact of Saudi Arabia’s sovereign wealth fund PIF emerging as EA’s main owner. It would be the first time that a gaming company of this calibre would be controlled by an authoritarian regime, the source said.

From a Foreign Subsidies Regulation (FSR) perspective, there may be concerns as to whether EA could receive Saudi financing that advantages it in the long run, while European rivals struggle financially, the source added.

The deal does not present major hurdles from an antitrust standpoint, according to this source and an independent competition lawyer. However, Saudi Arabia’s prominence in the world of esports might be a source of concern, those two individuals said.

The country’s strategy is to become the world’s global hub for gaming and esports. PIF plays a role in this strategy through its gaming division Savvy Games Group, which owns the esports event organiser ESL and the online gaming platform FACEIT. The worry is that with EA, PIF’s strong presence in the overarching ecosystem would be further exacerbated, the source familiar with the matter said.

Even though there have been pledges of EA being granted artistic autonomy after the acquisition, European game developers are concerned that this could change in the future, the source said. There is also a worry that there is no regulatory regime where these “cultural” issues can be adequately addressed.

The independent lawyer said that, when assessing a merger, a regulator wants to make sure that a deal does not distort competition, but also that the market is not too politically influenced. When it comes to the gaming industry, media plurality does matter, he said.

A second competition lawyer added that another interesting regulatory angle of the transaction is how it will affect European users’ data, which is something that would be dealt with by national Foreign Direct Investment (FDI) regimes.

In the EU, the deal falls under the FDI jurisdiction of Germany, Italy, Spain, Poland, Ireland and Romania, according a second source familiar with the matter.

Electronic Arts and the PIF-led investor consortium did not reply to requests for comment.

by Tono Gil and Arezki Yaïche