Microsoft Says CMA Erred in Blocking Activision Acquisition

Microsoft is not giving up on getting the UK regulatory watchdog's approval.

The tech giant recently filed its appeal to the British Competition and Markets Authority (CMA) for it to reconsider its decision to block its acquisition deal with Activision.

The UK's CMA previously blocked Microsoft's acquisition deal because it was concerned about its alleged dominance over cloud gaming and the "significant shortcomings" of its solutions.

Microsoft CMA Appeal Details

Microsoft recently filed its appeal to the CMA's decision, but it is only now that its contents were revealed. The company mentioned that the CMA made "fundamental errors" in its assessment of Microsoft's position in cloud gaming services - it didn't consider the constraints from native gaming, wherein gamers access games installed on their devices through a physical disc or digitally download it to their device.

The tech giant argues that cloud gaming shouldn't be considered a separate market due to its potential for gamers to decide to switch to native gaming instead, which provides them with the flexibility to play games and save storage simultaneously.

In addition, Microsoft stated that the CMA erred in failing to consider the three long-term commercial agreements Microsoft entered into with cloud gaming providers for the licensing of rights to stream its games, including Activision's after its acquisition deal gets closed.

Gamespot mentioned in its report that these deals were critical in the EU's decision to give Blizzard the go-ahead about its acquisition deal with Activision. You may remember that European Commission Executive Vice President for A Europe Fit for the Digital Age Margrethe Vestager said that Microsoft inking these deals fully addressed the EU's concerns with the acquisition deal and that it had significant pro-competitive effects on the gaming market.

Furthermore, Microsoft argued that the CMA made a mistake by blocking its acquisition deal with Activision on the basis it had a duty to impose what the CMA described as a "comprehensive remedy," allowing it to overlook various remedies and assess their benefits and detriments.

The company also said that the CMA unlawfully failed to take account of the "interests of comity," committed a mistake in rejecting Microsoft's Cloud Rememdy, and acted in violation of the company's common law duty of fairness and its own remedies guidance.

What's Next For Microsoft?

While Microsoft may have submitted its appeal to the UK government, having the CMA's block repealed will most likely be a lengthy process for the company. According to Eurogamer, the UK's Competition Appeal Tribunal says it will still need to go back through the CMA for review despite being capable of dealing with straightforward cases within nine months.

So far, only the UK has blocked Microsoft's acquisition deal with Activision, while the US remains the only country to be undecided on the matter pending an investigation. 37 countries have approved the acquisition as of press time, which include China, Japan, Saudi Arabia, and Brazil.