Microsoft has filed its appeal against the UK Competition and Markets Authority’s decision to block its acquisition of Activision, and now the details of its appeal have been revealed. According to Microsoft: “The CMA has made fundamental errors when assessing Microsoft’s position in the cloud gaming sector.” This assessment is seen as a significant part of the UK’s decision to block the acquisition. Microsoft further argues that cloud gaming shouldn’t be seen as a separate market but as inseparable from native gaming that is playing a game that is installed on your device, and there is a potential for gamers to decide to switch to native gaming instead.
Correcting the CMA’s Market Definition
Microsoft aims to correct the CMA’s “erroneous, narrow, market definition” of cloud gaming while point out “three long-term commercial agreements” that would bring Microsoft-owned games to other cloud services for the next ten years, including Activision titles if the merger goes through. These agreements were pivotal in the European Union’s decision-making, when it approved the merger earlier this month.
“To us, this solution fully addressed our concerns,” said Margrethe Vestager, the EU’s decision-maker. “And on top of that, it had significant procompetitive effects.”
Microsoft outlined five different grounds for appeal, each laying out an error in the original decision’s reasoning. As part of its appeal, Microsoft has asked to have the decision quashed “in its entirety,” as well as having the CMA pay the costs associated with appealing. Overall, 37 countries have approved the acquisition, with the UK blocking it, and the USA yet to approve the deal. The Federal Trade Commission is suing Microsoft to try to block the deal, with the initial hearing not until August this year.
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