Microsoft reveals CMA appeal grounds and says UK regulator ‘overestimates the role of cloud streaming’

A summary has been published which explains the terms of Microsoft’s appeal against the UK competition regulator, and its decision to block its proposed acquisition of Activision Blizzard.

In April, the Competition and Market Authority (CMA) said it was preventing the $69 billion deal due to concerns about its impact on the nascent cloud gaming market.

Microsoft officially lodged its appeal against the decision earlier this week.

Now a ‘Summary of Application’ document, which has been posted on the Competition Appeal Tribunals website, summarises the five grounds under which Microsoft believes the CMA’s decision should be challenged.

The grounds claim that, according to Microsoft:

• the CMA made errors in assessing Microsoft’s position in cloud gaming services by “failing to take account of constraints from native gaming”
• the CMA failed to take account of three long-term commercial agreements Microsoft has entered into with cloud gaming providers
• the CMA’s claim that Activision would have likely made its games available on cloud services without the merger was “irrational and arrived at in a procedurally unfair manner”
• the CMA’s claim that Microsoft would have the ability and incentive to ‘foreclose’ rival cloud gaming services by withholding access to Activision games was “unlawful”
• overall, the CMA’s decision was a “breach” of its “common law duty of fairness” and its own “remedies guidance”.

In a statement, Microsoft’s corporate vice president and deputy general counsel Rima Alaily said: “The CMA’s decision is flawed for multiple reasons, including its overestimation of the role of cloud streaming in the gaming market and our position in it, as well as its unwillingness to consider solutions that received overwhelming industry and public support.

“We are confident in the strength of our appeal and the binding commitments we have made to increase competition and choice for players today and in the future.”

Further reading

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Microsoft files appeal against UK decision to block its Activision Blizzard deal

The UK's competition watchdog prevented the deal over cloud gaming concerns

Last week, the European Commission and China’s competition regulator cleared the deal, which would see Microsoft gain ownership of popular gaming franchises including Call of Duty and World of Warcraft.

“China’s unconditional clearance of our acquisition of Activision Blizzard follows clearance decisions from jurisdictions such as the European Union and Japan, bringing the total to 37 countries representing more than two billion people,” Microsoft said at the time in a statement issued to TechRaptor.