UK Regulator 'Stands by Its Decision' to Block Microsoft's Activision Blizzard Deal - News
by William D'Angelo , posted on 03 June 2023 / 3,875 Views
The European Union regulator, the European Commission, announced earlier today it has approved Microsoft's $67.8 billion acquisition of Activision Blizzard. The deal was passed due to the deals signed by Microsoft in recent months related to cloud gaming.
The UK regulator, Competition and Markets Authority (CMA), who blocked the deal last month, has released a response to the European Commission approving the deal.
"The UK, US and European competition authorities are unanimous that this merger would harm competition in cloud gaming," reads the CMA response. "The CMA concluded that cloud gaming needs to continue as a free, competitive market to drive innovation and choice in this rapidly evolving sector.
"Microsoft’s proposals, accepted by the European Commission today, would allow Microsoft to set the terms and conditions for this market for the next 10 years. They 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.
"This is one of the reasons the CMA’s independent panel group rejected Microsoft’s proposals and prevented this deal. While we recognise and respect that the European Commission is entitled to take a different view, the CMA stands by its decision."
Microsoft does plan on appealing the decision with the the Competition Appeal Tribunal in the UK. The company has hired lawyer Daniel Beard KC, who has been able to defeat the EU regulator on multiple occasions.
The European Union regulator is the eighth confirmed place to have been confirmed to have approved the deal, following Ukraine, South Africa, Japan, Chile, Brazil, Saudi Arabia, and Serbia.
Our response to the European Commission's announcement today on Microsoft/Activision ⬇
— Competition & Markets Authority (@CMAgovUK) May 15, 2023
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Microsoft’s proposals, accepted by the European Commission today, would allow Microsoft to set the terms and conditions for this market for the next 10 years.
— Competition & Markets Authority (@CMAgovUK) May 15, 2023
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This is one of the reasons the CMA’s independent panel group rejected Microsoft’s proposals and prevented this deal.
— Competition & Markets Authority (@CMAgovUK) May 15, 2023
While we recognise and respect that the European Commission is entitled to take a different view, the CMA stands by its decision.
[5/5]
A life-long and avid gamer, William D'Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012 and taking over the hardware estimates in 2017. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel. You can contact the author on Twitter @TrunksWD.
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Console wars are yesterdays news. Regulator wars are in. These are very serious people.
Tomorrow you'll see fights to elect the best cola between Pepsi and Coke
And it's obviously Pepsi
Yeah, Pepsi curbstomps Coke.
Thank you
Back when I still drank pop, I did prefer Crystal Pepsi over all other colas.
What's crystal pepsi ? Sprite ?
It was a clear Pepsi that they released back in the 90's, wasn't a big hit in sales so it was discontinued within 2 years, and is now a rare collectors item on eBay. I remember buying a few cans and bottles as a kid growing up in the 90's.
https://en.wikipedia.org/wiki/Crystal_Pepsi
Interesting, thanks!
Crystal Pepsi has had occasional re-releases in the time since, too. :) But I no longer drink pop, so I leave it in my memories.
Oh my god... Even on that we disagree...
We were on the verge of greatness, we were this close
Straight up lies in their response, pathetic. Glad to see the CMA is getting ratioed on their tweets. It's clear that the majority are in support of this deal going forward.
Who even does cloud gaming. Gamers rather not game on cloud as there's too much latency and terrible internet
I think gamers also rather not pay €70 for unfinished games littered with micro-transaction, a little while ago, console gamers also didn't want to go digital, yet here we are.
In the end, it really doesn't matter what gamers want, the big companies will decide how we play.
I haven't really been following this deal, but I do think, from the sidelines, this looks like a company growing too big for the industry.
They will still be only the third largest player in gaming. So it's hard for me to see how we could argue that they are growing too big for the industry.
How so? According to https://www.alltopeverything.com/top-10-biggest-video-game-companies/ they are second right now and will get very close to Sony when adding Activision Blizzard revenue. Still smaller than Sony, but it's not as easy as just adding up some numbers I believe. Third largest in console gaming perhaps, but obviously Microsoft's reach goes way beyond that.
To further try and explain where I'm coming from; Activision Blizzard has just over half of the revenue Nintendo has, but AB's revenue comes almost completely from always online gaming, microtransactions and subscriptions, while Nintendo's majority revenue comes from game sales. (I'm unsure the impact their online service has right now). While Nintendo has more revenue in total, their share of the online pie is much smaller.
They're not looking at the entire gaming market, they are, supposedly, trying to control a, fast growing, section of that market.
Lets say Tencent would want to buy Activision Blizzard. Looking only at gaming revenue, they would become the second player at the moment of the deal, so no big deal, but it definitely doesn't sound like something that would have a positive impact on the future of gaming.
(and again, I haven't been keeping up to date with all this, I'm just looking up stuff as I go, so I might also be rambling a bit and jump between points as I try to form my opinion. My initial point to dane007 was only that ''what gamers want =/= what gamers get'')
Tencent is number 1 and then Sony is number 2. Ms is nowhere near second .don't know where U get your figures from.
Has VA said ms will still be far in third behind Sony.
Well, to be honest; what else could we expect. I would have done the same being them, maybe not that quickly lol but the same :)
It is too late now for them to backtrack, it would be a huge embarrassment.
They should have just approved it . Rejecting it on maybes and false facts it's equally bad. Shows that they been paid off to reject it
Oh yah I think the decision to reject it is wrong esp. based on the cloud :) Don't get me wrong.
But now that they did it; they won't backtrack. It would look so bad.
Can you imagine, esp. because EU is approving it, they will never change their position to aligned with Europe :) That's would be so bad for them
That's probably true but I hope they are forced to do. They need to be made an example of lying and making decisions on false facts.
How does it showw they've been paid off? Likely the only person/company who would be prepared to is Sony, but if you're saying the CMA were accepting bribes then surely Microsoft would have tried to bribe them as well and would have out-bribed Sony.
This is the same point I'm making elsewhere - people are making their own assumptions and inventing conspiracies based on complete conjecture just because they disagree with the CMA's conclusions.
Judging by the newest article. Eu official has said that they included their stats with Gamepass users . That proves that they reject it with no real facts . That alone smells bribery . If they based it on actual figures it would be small and they wanted something to reject it on and made the figures up
Please explain how making sure the biggest tech and software company in the world gets bigger by gobbling up one of the biggest software publishers in the world will be protecting competition in the long run.
Nobody has given any sound reasoning as to how and why this will be good for competition in the long run. All we got are short-sighted and bias-driven takes that only focus on the egotistic and fanboyish ramifications, refusing to look at the bigger picture and forgoing the long term implications.
This has been debated over and over. You can def. find a TRUCK load of articles explaining why if you Bing it! You may disagree with that reasoning, but they are out there; and this is fine (and I'm not arguing that for some it may not sound good) but hammering your opinion about this deal over and over in comments, and asking people to 'explain' again will not change it :)
Doesn't that work the other way as well though regarding people disagreeing with the CMA decision?
Where did I talk about the CMA or the people disagreeing their ruling for that matter? My reply has nothing to do with that.
It has to do with people asking why this is a good deal or not in comments over and over about things that have been debated for literally months...
In that case why this deal would be good (or not in your case) for the competition... This has been beaten to death, you can agree or disagree, it's your choice; but if, as of today, you do not understand the reasoning of those in favor of the deal, you've been living under a rock for the past year.
And for the record, obviously, I'm for the deal, but I will not keep asking "why" some are against it. Like I said, this is beaten to death and while I disagree with those, I understand their reasoning.
While arguing, people usually mix up "understanding" and "agreeing"... Leading to something like "if you disagree with my reasoning, then you do not understand me"... :D Don't you agree? ;)
You’re doing like all the others and giving non answers . 👌
That you didn't mention it yourself doesn't mean it isn't not relevant. - well, I suppose I was more making an analogy to a tangential point.
Plenty of people are 'hammering' their opinion about the CMA over and over in the comments - ie the inverse of your example - but people stating conjecture about them lying and being corrupt won't change it.
I would agree with your last point though, having had another user on this topic (to be clear, I don't mean you) accuse me of exactly that because I challenged their logic.
I don't think the CMA is corrupt btw :) I disagree with their ruling but I understand their position. I'm not talking for everyone here, just myself.
I'm interested what you think the long term ramifications will be? Personally I think it's hard for anyone to predict things more than 10 years into the future, after these 10 year CoD deals expire. My thoughts on the ramifications both short term and long term:
Short term (this generation and the first few years of next-gen)
- I don't see all that much changing in the short term. Microsoft will be able to put ABK's backlog of games and non-CoD future games into Gamepass as soon as the deal closes, but that on it's own won't have a huge effect for Xbox, they'll get some more Gamepass subs but ABK's catalog alone can't drive Gamepass from it's current 30m~ subs up to like 70m subs or anything too crazy like that, they may hit 40m within a year of the acquisition closing, and then after CoD can enter Gamepass day one starting with the 2026 CoD game they may hit 50m after that year's CoD lands day one. Hardware wise, the acquisition is not likely to have all that much effect on the battle between Xbox Series and PS5, PS5 is already pulling into a massive lead (by the end of this year PS5 will be more than 2x Xbox Series, earlier in the generation than PS4 doubled XB1), and with few upcoming ABK games able to be made exclusive this generation, I just don't see the ABK deal allowing Xbox to make up all that much ground against PS5's massive lead, there is a good chance that PS5 ends this generation with at least 2x the sales of Xbox Series.
-
As for the first 4 or 5 years of next generation, PS6 will obviously have the advantage. They'll have the brand power advantage, an advantage in most smaller markets, the advantage of people wanting to stay in the ecosystem they are already in due to game library backwards compatibility and friends lists, etc. Xbox still won't be able to make CoD exclusive until like 2034, and ABK has few other big IP that Xbox could even choose to make exclusive if they wanted to, Diablo 5 is probably at least 8 years away considering the size of the gap between Diablo 3 and 4, while Overwatch 3 is probably at least 6 years away, and I honestly can't see Xbox making either of those exclusive to the next gen Xbox. ABK has few other IP that are big enough to move consoles, things like Crash Bandicoot, Guitar Hero, Tony Hawk's, and Spyro just aren't system sellers in this day and age, at least not big system sellers. Xbox will definitely be beginning next gen at a pretty big disadvantage to PS6.
Long Term (halfway through next generation and beyond) - Eventually the 10 year CoD deals will expire in around 2034, but will Xbox choose to make CoD exclusive then? They suggest they won't, and I believe them, while making CoD exclusive would move some consoles, they'd already be halfway through next gen by that point and PS6 will already have a pretty big lead most likely, seems rather pointless to make CoD exclusive at that point, taking it off of the biggest platform and losing a ton of revenue just to still lose the generation in hardware sales, it doesn't make sense, it's not good business. Maybe it would make sense to make CoD exclusive to the next, next gen Xbox in the late 2030's, as making CoD exclusive from the beginning of a generation would have more hardware sales impact than making it exclusive halfway into a generation, but that is so far into the future it is pointless to even worry about it, we have no idea if there will be a next, next gen Xbox or PS7, everything could have moved to cloud by then for all we know, and CoD could have dwindled in popularity by the late 2030's, there are too many unknowns to worry about that.
-
If the future is the cloud rather than a next, next gen Xbox and PS7, Microsoft's concessions to the European Commission have made sure that Xbox can't use ABK to gain an early advantage in the Cloud gaming space until the 10 year deals are up in 2034, nothing ABK puts out can be made exclusive to Xbox Cloud Gaming for those 10 years, and Xbox is required to give ABK game licenses to any Cloud company that wants them, no matter how small of a start-up it is, or how large it is (GeForce Now and Amazon Luna are the likely the largest alongside Xbox Cloud Gaming). The ABK acquisition can't be used to further Xbox's cloud gaming ambitions for quite some time, EC has made sure of that.
Summary:
So short term, Xbox will lose this generation, probably by at least 2x, ABK can't do much to change that. Xbox is also going to enter next generation without ABK giving them much advantage due to the 10 year CoD deals covering the first half of next generation, so they will likely lose the next gen hardware sales battle to PS6 as well. Xbox currently lacks a Cloud gaming monopoly, and the European Commission has successfully prevented Xbox from using ABK to create a Cloud gaming monopoly until 2034. Even if they do make ABK games exclusive to Xbox Cloud Gaming starting in 2034, what's to say that their competitors like GeForce Now and Amazon Luna won't already be so far ahead of them at that point that they won't need ABK Cloud exclusives just to get caught up to their top 2 Cloud gaming competitors. Sony could enter the Cloud market in a big way as well over the next 10 years before Xbox is able to make ABK games Cloud exclusive.
What Xbox will get from ABK is greatly increased revenue, both from game copy sales and increased gamepass subs. But making more revenue than their competitors doesn't mean that they can beat Sony at marketshare (or Nintendo), they are always going to be on the backfoot there due to how long it took them to fix their 1st party issues, their lack of effort in markets outside of the US and UK relative to Sony and Nintendo, and more, those are disadvantages that it will take Xbox a long time to fix. They took so long to start to fix what was wrong with Xbox that they are set back a decade in terms of brand power growth compared to Sony and Nintendo.
Well that was fast.
It's like when your ex is with somebody else now and you're like "I don't care"
Pro the merger or not. The juice keeps on flowing :-D
For real, at least we have a nice show :D
To me it's exasperating for how long they've been going through this.
yah this is ridiculous :D It will probably go through at the end but the amount of money, energy, resources and time wasted on this is simply insane.
At the same time, that's a freaking huge deal...
Given two of the big three regulators are blocking the deal I’m not sure it the deals completion can be taken as a foregone conclusion, though I suppose we have to wait and see what happens with the appeals over the summer.
Which two? The only one blocking the deal is the CMA. The US FTC is not standing in the way of the deal closing. They are suing to try to extract concessions from Microsoft. But, the way that they have gone about has no legal possibility of stopping the deal from closing.
This was certainly done intentionally, so that they won't have to fight in in a real courtroom.
I was referring to the FTC - the big 3 regulators are the FTC, EC and CMA.
FTC is standing in the way at present because the deal can't close until the suit is resolved. I'd also be wary of assuming how the case will turn out ahead of time although equally I haven't looked into it in depth so you may well have a better understanding of it than me.
It was also pointed out to me in this thread that the FTC is comprised of partisan political appointees so that's going to have an impact one way or another.
It is not correct that the deal can't close until the FTC lawsuit is resolved. That would be the case, had they sued them in federal court. But they sued them in the FTC's administrative court, which does not have the authority to stop the deal from closing. This is a very significant detail, which effectively means that the FTC is not interested in stopping the deal from closing.
Things like this are never usually quick.
A Brussels spokesman added that the Commission had “based its decision on hard evidence and on extensive information and feedback”, while sources dismissed the UK's concerns about cloud gaming, saying that it accounted for just 1pc to 2pc of the overall market and any potential competition impact was therefore not significant.
EU roasting CMA lol
This drama is more entertaining than the games AB make
We should just call it "Microsoft's proposed $70+ billion acquisition of ABK" because by the time all their legal (and other acquisition) costs are factored in, there's no way this this transaction is coming in under $70 billion if it goes through.
Repeating the same lies as previous, doesn’t alter your corruption CMA.
Notice how Amazon Luna is never ever mentioned by these fraudulent “regulators” ? They know that competition already exists in cloud, but refused to acknowledge it because they want to be corrupt..
Idk how familiar you are with American politics, but if not, the FTC is purely playing political games. Democrats have the majority and the vote was 100% along party lines. As it has been since the Trump era. Even beyond that. They’re not even suing to actually block the deal. In fact, FTC’s chairman is wasting so much money on stupid challenges that Biden himself is rejecting their call for more money lol. FTC will get destroyed in the courts if it comes to that and they know it. Which is why they’re postponing it as long as humanly possible. FTC was always going to be a nonissue compared to the CMA.
For some reason my comment posted 4 times lol
If you want to call the CMA incompetent, naive, lack understanding, or a whole number of other adjectives in regards to this merger, then I would agree, but corrupt isn't one of them.
Kind of seems like they thought the EU would also block this and be be big buddies but now they're bummed out that they're being left alone in the dark somewhere.
"Good for them"
CMA sticking to their guns is nice to see. MS will likely lose the appeal to CAT regardless so today's EU decision is a nothing burger for the end result and it looks like the market agrees with that today.
The cloud gaming is just a BS excuse.
😉 A Brussels spokesman added that the Commission had “based its decision on hard evidence and on extensive information and feedback”, while sources dismissed the UK's concerns about cloud gaming, saying that it accounted for just 1pc to 2pc of the overall market and any potential competition impact was therefore not significant.
The EU had concerns about cloud gaming also though so how is it BS excuses? The only difference is the EU was willing to accept the contracts MS signed with other competitors while the CMA decided to reject it and just let the market grow on it's own. If the EU didn't have concerns about cloud gaming why are they forcing MS to give out ABK IP's to all cloud streamers for 10 years?
I mean, the overall market doesn't agree with the CMA hence why they are the only ones to block it as of yet lol. I think your wrong about MS losing appeal to CAT. It's more likely they have the CMA re-review since their entire argument hinges on cloud gaming being it's own market that may or not become big which is iffy at best. Several of the CMA's concerns over cloud gaming are specifically addressed with the EU's decision. Now, will the CMA overturn their decision if they have to re-review? Chances are slim, but this also means the CMA would have to find another reason to block it. This would be interesting since they didn't have any other concerns with the merger.
