Just as it said, Microsoft has appealed the CMA’s decision to block its acquisition of Activision Blizzard, and its summary of the arguments is now available for scrutiny.
In April, after months of deliberation, the UK’s Competition and Markets Authority made a surprise decision to block Microsoft’s proposed $69 billion takeover of Call of Duty, highlighting concerns about the burgeoning cloud gaming sector, and arguing the deal would risk “suffocating competition in This is a growing market.”
It is a position welcomed by some and rejected by others. The European Union, which agreed to the deal in May after Microsoft agreed to concessions, criticized the position of the Capital Markets Authority, and a number of politicians in the United Kingdom, including Chancellor Jeremy Hunt, also raised their concerns. Microsoft, of course, criticized the decision, confirming that it would launch an appeal.
This appeal would require Microsoft to take its case to the UK Competition Court of Appeal, and a summary of its arguments is now available for consideration. This outline outlines five main reasons on which Microsoft is challenging the decision, starting with its claim that the CMA made “fundamental errors in its assessment of (Microsoft’s) current position in cloud gaming services by not taking into account limitations from on-premises gaming” (that is, where consumers play a game over their devices via a digital download or disc).
It also claims that the CMA “mistakenly failed to properly consider three long-term commercial agreements (Microsoft) has with cloud game providers”, and claims the CMA’s conclusion that Activision would have made its games available on cloud game services without the merger were both “irrational and reached in a procedurally unfair manner,” and argues that the CMA findings “Microsoft will have the ability and incentive to block competing cloud gaming services by blocking access to Activision’s gaming content” following an “unlawful” acquisition.
Finally, Microsoft maintains that the CMA “erred in the law by proceeding on the basis that it had a duty to impose what it called a blanket remedy”, “unlawfully failed to consider the interests of comity”, “erred in its refusal of Microsoft Cloud Remedy, and “Breached Microsoft’s common law duty of fairness and directives of the CMA.”
Appealing the CMA’s decision is likely to be a lengthy process for Microsoft and Activision; The UK’s Competition Court of Appeal says it aims to deal with direct cases within nine months, and if the appeal is successful it will still need to be returned through the CMA for review.