The EU has approved the $55 billion Saudi-led acquisition of EA in accordance with its subsidy regulations.

      The European Commission has sanctioned the PIF-led privatization of Electronic Arts under its Foreign Subsidies Regulation, eliminating one of the remaining obstacles to what will be the largest leveraged buyout in history. The European Union has given the green light to the $55 billion acquisition of Electronic Arts by a Saudi-led consortium, clearing one of the last regulatory challenges for this unprecedented transaction.

      On July 31, the European Commission approved the deal under foreign-subsidies rules, mere days after granting approval on competition grounds, navigating a regulatory process similar to that which Microsoft encountered with its Activision Blizzard acquisition a few years prior. The buyers consist of a powerful trio: Saudi Arabia's Public Investment Fund, the private equity firm Silver Lake, and Affinity Partners, led by Jared Kushner, who are set to take EA private in September 2025.

      The scale of the deal is historic, amounting to $55 billion, making it the largest take-private transaction ever, financed through a combination of equity from the consortium and significant debt, with PIF expected to own approximately 93% of the company upon completion. The review concerning subsidies was particularly sensitive. The EU's Foreign Subsidies Regulation aims to prevent external state funding from disrupting competition when a foreign-backed entity acquires a business in Europe.

      PIF is precisely the type of buyer the regulation aims to scrutinize. As a sovereign wealth fund with a value around $1 trillion, its financial backing raised concerns about potential competition distortion, highlighting the importance of the clearance. However, the Commission determined that the deal would not pose competition issues and cleared it under both merger and subsidy regulations, allowing the transaction to proceed within the European Union.

      For EA, this marks a significant shift in ownership. The creator of franchises such as The Sims, Battlefield, Apex Legends, and its longstanding football series will transition from public markets to the ownership of a sovereign fund and its partners. This acquisition is also a strategic move for EA’s monetization approach, as the publisher has been aggressively broadening its revenue sources, recently establishing a comprehensive advertising platform within its games targeting over 100 million players.

      The strategic rationale behind this acquisition is based in Riyadh. This purchase forms a key element of Saudi Arabia's ambition to establish itself as a global gaming hub, as part of a larger strategy to diversify its economy away from oil dependency. For years, PIF has been investing in this sphere through its Savvy Games division, acquiring stakes in various studios and esports companies worldwide, and EA represents its most significant asset to date.

      The political implications are significant. Jared Kushner's involvement, the use of Saudi state funds, and the control over games enjoyed by millions have attracted attention from human rights advocates and lawmakers concerned about the kingdom's intentions in terms of soft power.

      However, Europe is not the only regulatory body overseeing the deal. It still faces scrutiny in other regions, particularly in the United States, where the Committee on Foreign Investment is examining foreign ownership of American firms. This US review presents a substantial uncertainty, considering that foreign ownership of a major American publisher, especially one backed by a Gulf state and related to a president's son-in-law, falls under CFIUS's purview.

      Regulators globally are increasingly cautious regarding large technology deals. Tensions between the US and Europe concerning the regulation of technology have escalated, with American lawmakers advocating for a trade investigation into European tech regulations, even as Brussels approves this particular deal.

      The gaming industry has encountered similar trends before, with consolidation becoming prevalent across the sector, from speculation regarding Microsoft’s future acquisitions to its purchase of Activision, with EA's sale now reflecting that significant scale and substantial financial resources dictate the new norms.

      EA shareholders have already expressed their approval, voting overwhelmingly in support of the takeover, thus leaving regulators as the primary hindrance, a barrier that Europe has now removed. What remains is to cross the final threshold. With the EU's approval secured, the consortium will now direct its attention to obtaining remaining authorizations and ponder the implications of a sovereign-owned EA for the players who had no say in the matter.