Microsoft appeals UK decision to block Activision Blizzard acquisition, details grounds for appeal

Microsoft’s appeal against the UK Competition and Markets Authority’s (CMA) decision to block its acquisition of Activision Blizzard has entered a new phase as the details of the appeal are revealed. The appeal outlines Microsoft’s argument against the CMA’s assessment of its position in the cloud gaming sector, an essential aspect of the UK’s decision to halt the merger. With 37 countries having already approved the acquisition and the USA yet to rule on the deal, Microsoft’s appeal represents a crucial step in its efforts to proceed with the acquisition.

According to Microsoft, the CMA made “fundamental errors” in evaluating its position within the cloud gaming sector. The company argues that the CMA failed to consider the limitations of “native gaming,” the act of playing a game installed on a device when assessing cloud gaming services. Microsoft asserts that cloud gaming should not be regarded as a separate market since gamers have the potential to switch between cloud and native gaming based on their preferences.

Microsoft emphasizes the need for the CMA to correct its “erroneous, narrow market definition” of cloud gaming. The company contends that the potential for long-term commercial agreements, which would extend to other cloud services for a decade and encompass Microsoft-owned games, including titles from Activision if the merger proceeds, should be considered when evaluating the merger’s impact.

Microsoft points to the significance of the three long-term commercial agreements in the European Union’s decision to approve the merger. These agreements were viewed as an effective solution by the EU, addressing concerns and yielding significant procompetitive effects. By highlighting the importance of these agreements, Microsoft aims to reinforce the potential benefits and positive outcomes resulting from the acquisition.

Microsoft’s appeal presents five distinct grounds, each identifying an error in the CMA’s original decision. The company seeks to have the decision quashed entirely while requesting that the CMA bear the costs associated with the appeal. The appeal process marks a critical juncture in Microsoft’s bid to overturn the UK’s ruling and proceed with the acquisition.

With approval from 37 countries already secured, the acquisition faces a hurdle in the form of the UK’s decision to block the deal. Furthermore, the USA has yet to grant approval, and the Federal Trade Commission has initiated legal action to prevent the merger. The first hearing is scheduled for August, indicating a prolonged and complex process ahead.

Microsoft’s appeal against the UK Competition and Markets Authority’s decision to block its acquisition of Activision Blizzard underscores the company’s commitment to proceed with the merger. By challenging the assessment of its position in the cloud gaming sector and highlighting the importance of long-term commercial agreements, Microsoft seeks to overturn the decision and advance its ambitious plans in the gaming industry. With multiple countries having approved the acquisition, the outcome of Microsoft’s appeal and the pending approval from the USA will significantly shape the future of this landmark deal and its potential impact on the gaming industry.

The outcome of Microsoft’s appeal holds significant implications for the gaming industry as a whole. If successful, the acquisition of Activision Blizzard by Microsoft would solidify the tech giant’s position as a dominant player in the gaming market, further consolidating its influence and expanding its portfolio of renowned franchises.

The appeal process not only challenges the UK’s decision but also sheds light on the complexities surrounding mergers and acquisitions in the gaming industry. The scrutiny of regulatory bodies reflects the increasing importance of gaming as a major entertainment sector and the need to carefully evaluate potential monopolistic practices and their impact on consumers and competition.

Beyond the UK, the approval of the merger by 37 other countries underscores the global reach and impact of this deal. Microsoft’s efforts to secure regulatory approval from various jurisdictions highlight the company’s determination to navigate complex legal landscapes and overcome obstacles to bring its vision to fruition.

The pending approval by the Federal Trade Commission in the United States adds another layer of uncertainty to the future of the deal. The legal action initiated by the commission demonstrates the rigorous evaluation process that Microsoft must undergo to convince regulators of the deal’s benefits and its compliance with antitrust regulations.

The outcome of Microsoft’s appeal and the subsequent approvals or rejections will shape the competitive landscape of the gaming industry. If the acquisition proceeds, it could potentially reshape the dynamics of the market, influencing game development, distribution strategies, and the availability of exclusive titles across platforms.

Microsoft’s appeal against the UK Competition and Markets Authority’s decision represents a crucial chapter in the ongoing saga of the company’s proposed acquisition of Activision Blizzard. The appeal aims to rectify perceived errors in the assessment of the cloud gaming sector and highlights the importance of long-term commercial agreements. As the gaming industry eagerly awaits the outcome, the decision will have far-reaching implications for the future of gaming and the competitive balance among major players in the market.