Microsoft will have to appeal its Activision merger to the CMA in July after the regulator blocked the sale earlier in April of this year. The CMA said it was preventing the $69 billion deal due to concerns about its impact on the cloud gaming industry.
Without the CMA’s approval, Microsoft won’t be able to add Activision Blizzard to its roster of studios. Even after multiple attempts, a Call of Duty-driven marketing campaign and signing so-called “agreements” with its competition, the CMA still doesn’t trust Microsoft’s intentions with the merger.
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According to Microsoft, the company aims to challenge the CMA on five grounds. Each of these will have to be scrutinized and dealt with as the regulator explains why it blocked the deal and provide evidence accordingly.
- The CMA made errors in assessing Microsoft’s position in cloud gaming services by “failing to take account of constraints from native gaming”
- The CMA failed to take account of three long-term commercial agreements Microsoft has entered into with cloud gaming providers
- The CMA’s claim that Activision would have likely made its games available on cloud services without the merger was “irrational and arrived at in a procedurally unfair manner”
- The CMA’s claim that Microsoft would have the ability and incentive to ‘foreclose’ rival cloud gaming services by withholding access to Activision games was “unlawful”
- The CMA’s decision was a “breach” of its “common law duty of fairness” and its own “remedies guidance”.
At the same time, Microsoft will also have to handle the allegations laid out in front of them regarding cloud gaming. In addition, the company will be forced to provide details on the 10-year contracts it has signed with Nintendo and other companies.
The case will officially kick off on 24 July and run for about 10 days. However, according to Judge Marcus Smith, he says he doesn’t expect the case to take 10 days to reach a conclusion.
“I’m not expecting it to take the whole of those 10 days but I would like the parties to err on the side of longer rather than shorter oral submissions. It seems to me that that is an excess that we can afford.There is a tendency—and it’s very much driven by the Tribunal rather than the parties—to cut submissions to shorter than they perhaps ought to be. I want to do the reverse in this case. I want to have the parties understand that we will want to give them every opportunity to unpack the difficulties of this case in oral submissions and for us to have the time to do that.”
Microsoft, on the other hand, wanted the CMA to hear the case much sooner than July. The company was hoping to get the formalities out of the way before its Xbox Showcase event next month. The CMA didn’t budge on the date.
“The CMA’s decision is flawed for multiple reasons, including its overestimation of the role of cloud streaming in the gaming market and our position in it, as well as its unwillingness to consider solutions that received overwhelming industry and public support.”
Microsoft’s Activision merger has been signed off in almost 40 countries so far. The latest is South Korea who greenlit the deal yesterday.
