A clash of epic proportions awaits the gaming industry as tech giant Microsoft gears up for a double summer showdown against regulatory bodies, both in the UK and the US. The journey of Microsoft’s Activision Blizzard acquisition approval has stumbled upon roadblocks from UK’s CMA and US’ FTC. The heated battle of Microsoft’s ambitious Activision Call of Duty bid is set to unfold on July 24th, 2023, against the CMA while the face-off with the FTC will commence on August 2nd, 2023.
The CMA’s decision to block Activision Blizzard’s proposed bid of $68.7 billion by Microsoft has fanned the flames of this impending war. The CMA’s concerns to block the acquisition are likely over the potential perils of Microsoft’s overwhelming dominance in cloud gaming services. Already reigning between 60-70 percent in the cloud gaming market, the CMA fears that by gaining control of Call of Duty, World of Warcraft and Overworld, Microsoft could obtain an undue monopoly in the gaming industry.
Microsoft Activision Acquisition Approval: UK’s CMA Appeal Date
Microsoft filed a skeleton argument with the Competition Appeal Tribunal asserting that the CMA has committed “fundamental errors” in its analysis. They contend to bring forth four expert witnesses to support their claim in a bid for judicial review. Microsoft argues that the CMA has failed to consider the potential for seamless transitions between cloud gaming and native gaming and has misdefined the cloud gaming market.
Notably, Microsoft does not offer Xbox Cloud Gaming as a standalone product, except for Fortnite, which can be streamed without an Xbox Game Pass Ultimate subscription.
The difference between a standalone in the cloud gaming market and an add-on service is expected to be a pivotal point of contention for Microsoft’s appeal for Activision acquisition’s approval.
“Microsoft has a strong position in the cloud gaming market and the evidence that the CMA has mounted shows that Microsoft would find it commercially beneficial to make Activision’s games exclusive to its own cloud service.”
Unyielding in their resolve, Microsoft has recognized 5 grounds of appeal. One claim alleges that CMA has neglected to consider the numerous cloud gaming agreements that it signed with competitors in the lead-up to the decision.
Furthermore, the tech giant argues that the CMA’s belief that Activision was about to make its gaming content available on cloud gaming services independently of Microsoft’s acquisition is ‘irrational. Microsoft further alleges the CMA of committing four errors in its findings based on Microsoft’s withholding of Activision Blizzard’s gaming content from rival services.
Microsoft was originally pushing for a four-day hearing in mid-July and will face the CMA starting July 24th. Justice Marcus Smith, presiding over the case, has scheduled a tight six-day process. The CMA had been looking to postpone the hearing to fall, citing that it requires the time to prepare a defense of its decision.
Call Of Duty’s Impact On Microsoft’s Activision Deal
The drama does not end there. While the regulators’ entanglements come undone for Microsoft’s Activision deal in another country, the investigation of FTC’s lawsuit against the acquisition is still ongoing. An evidentiary hearing is set for August 2nd, merely days after the UK CMA’s appeal date for the Microsoft Activision deal, commences.
This dual-front war could potentially reveal rare details about gaming industry exclusivity deals if previously hidden documentation becomes public. Microsoft and PlayStation maker Sony’s lawyers have been combating over how much evidence will Sony’s internal documentation and records serve.
Microsoft’s quibble with the UK and the US regulators begins shortly, but the European Union (EU) has given the blessing for the union, earlier this month. EU antitrust chief Margrethe Vestager, even praised Microsoft’s acquisition of Activision Blizzard, underscoring its ‘significant precompetitive effects’.
Vestager emphasized the EU’s commitment to maintaining a just and fair opinion amid the evolving landscape of consumer habits, disruption, and consolidation in various sectors.
The Call of duty has been sounded. The gaming industry braces itself for a high-stakes battle for Microsoft’s Activision acquisition approval, but will it reshape the cloud gaming industry? The world is watching.
