The CMA stands by its decision to block Microsoft’s Activision Blizzard Deal despite the EU’s approval

The EU has approved Microsoft’s Activision Blizzard acquisition, and the UK’s CMA disagrees

The European Commission has officially approved of Microsoft’s $68.7 billion dollar acquisition of Activision Blizzard, the company behind the Call of Duty franchise, World of Warcraft, and much much more. This approval confirms that Microsoft’s had offered the EU enough remedies and concessions to allow their deal to address all competition concerns that the commission had, but the UK’s Competition and Markets Authority (CMA) disagrees. 

In a statement on Twitter, the CMA has stood by their decision to block Microsoft’s acquisition of Activision Blizzard, stating that the EU would “allow Microsoft to set the terms and conditions for this [cloud gaming] market for the next 10 years”. The CMA also noted that the EU would “would replace a free, open and competitive market with one subject to ongoing regulation of the games Microsoft sells, the platforms to which it sells them, and the conditions of sale.” As strange as it sounds to have a regulator complain about ongoing regulation, it is clear that the CMA’s opinions on Microsoft’s Activision Blizzard deal have not changed. 

The CMA and the European Commission disagree on the impact that Microsoft’s Activision Blizzard Acquisition would have on the cloud gaming market. The CMA believes that Microsoft’s deal will harm competition, whereas the EU believes that they have forced a concession from Microsoft that would enable increased competition within the cloud gaming market through the deal. 

Microsoft and the European Commission have agreed on a remedy that would see Microsoft would allow European gamers to stream Activision Blizzard games using the cloud gaming services of their choice. Below is what the European Commission has to say about this remedy

       To address the competition concerns identified by the Commission in the market for the distribution of PC and console games via cloud game streaming services, Microsoft offered the following comprehensive licensing commitments, with a 10-year duration:

– A free license to consumers in the EEA that would allow them to stream, via any cloud game streaming services of their choice, all current and future Activision Blizzard PC and console games for which they have a license.
– A corresponding free license to cloud game streaming service providers to allow EEA-based gamers to stream any Activision Blizzard’s PC and console games.

Today, Activision Blizzard does not license its games to cloud game streaming services, nor does it stream the games itself. These licenses will ensure that gamers that have purchased one or more Activision games on a PC or console store, or that have subscribed to a multi-game subscription service that includes Activision games, have the right to stream those games with any cloud game streaming service of their choice and play them on any device using any operating system. The remedies also ensure that Activision’s games available for streaming will have the same quality and content as games available for traditional download.

Currently, Microsoft are appealing the CMA’s decision to block their Activision Blizzard acquisition and hope to change the regulator’s mind and allow their deal to be completed. While the CMA currently stands by their decision to block the deal, there have been claims that the regulator have made provably wrong assumptions while investigating the impact of the deal. Such mistakes include the assertion that Microsoft has 70% market share of the cloud gaming market, wrongly assuming that almost all Xbox Game Pass Ultimate subscribers utilise Microsoft’s Cloud Gaming services. With examples like this and more, Microsoft has some strong ammunition for its appeal. 

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