The CMA asserts protection of the cloud gaming market, while Microsoft argues that these actions “deter tech innovation and investment” in the UK
Microsoft has officially submitted an appeal against the UK’s competition watchdog’s decision to block its $69 billion (£56 billion) acquisition of Activision Blizzard, the creator of Call of Duty.
The American technology giant has confirmed that it has formally filed the appeal against the verdict issued by the Competition and Markets Authority (CMA) last month. The case will be presented before the Competition Appeal Tribunal (CAT).
In response to the CMA’s decision, Activision expressed the belief that the UK was “clearly closed for business.” Microsoft, known for producing the Xbox gaming console, criticized the move by the CMA, stating that it “discourages innovation and investment in technology” within the UK.
According to legal experts, the decision by the CMA has dealt a potentially fatal blow to the takeover, despite its approval by the European Union earlier this month.
Both the CMA and the European Commission, the executive arm of the EU, focused their attention on cloud gaming, which enables users to stream video games from remote servers to their devices.
The CMA stated that the acquisition would negatively impact competition in the cloud gaming sector, a view shared by the commission. However, the commission accepted Microsoft’s proposed remedies. As part of the compromise, Microsoft has agreed to provide free licenses for a period of 10 years, allowing European consumers who purchase Activision PC and console games to stream them through other cloud gaming services. Notably, Activision’s popular titles include World of Warcraft, Hearthstone, and Candy Crush.
According to Activision CEO Bobby Kotick, the European Union (EU) undertook a highly meticulous and deliberate process to gain a comprehensive understanding of the gaming industry.
In addition to the challenges it faces in the EU, the acquisition also encounters hurdles in the United States. The Federal Trade Commission (FTC) has filed a lawsuit to prevent the deal from proceeding. The formal submission of the appeal to the Competition Appeal Tribunal (CAT) was initially reported by Bloomberg and Sky News.
When the CMA announced its decision in April, Martin Coleman, the chair of the independent panel of experts overseeing the investigation, stated, “Microsoft already holds a dominant position and a significant lead over its competitors in cloud gaming. This acquisition would further strengthen its advantage, potentially undermining emerging and innovative competitors.”
Gareth Mills, a partner at the UK law firm Charles Russell Speechlys, remarked that the appeal demonstrated Microsoft’s willingness to utilize its substantial resources to challenge the CMA’s stance. He further noted, “The EU’s conditional approval of the Activision acquisition may provide an opportunity for both parties to explore an alternative approach. However, this would require a significant change in the current tone and attitude.
