Microsoft hopes that the remedy package offered to the EC will put pressure on the CMA.
Microsoft has now formally committed to making Activision’s portfolio of games, including Call of Duty, available on rival cloud-gaming platforms.
“More striking is the absence of any formal commitment to address key concerns raised by rival Sony about the deal’s impact on its PlayStation, and Google about the deal’s impact on its ChromeOS cloud-first operating system.”
As recently as Feb. 21 (the hearing), the EC still had concerns about those markets.
Microsoft’s offer comes after intense discussions with officials probing the deal, and the market test should be considered a good sign.
Under the terms of its in-depth review, the commission has until May 22 to rule on the deal, although it will soon need to circulate a draft decision internally and to national authorities.
The support of Nvidia has been key, according to MLex.
The extent to which Sony would benefit from the remedy on cloud gaming is unclear. Sony’s primary complaint has been that Microsoft would remove Activision Blizzard’s games from its PlayStation, or at the very least degrade their performance on the Sony console to drive its users to the Microsoft Xbox. “That appears to have fallen on deaf ears at the EU competition enforcer.”
The offer from MS (to Sony) presumably still remains on the table. So, at some point Sony may say yes. In any case, most probably Sony will first shift its attention to the CMA.
“No doubt Microsoft will have pointed CMA investigators to the EU regulator’s latest conclusions on that point. If Microsoft can get traction there and put a dent in the narrative against the deal, that would be no mean feat — but it may not be enough.”
However, the CMA’s last public word on the subject (acceptance of behavioural remedies) still remains: “None of the circumstances in which the CMA would select a behavioural remedy as the primary source of remedial action in a merger investigation … appears to be present.”
Basically the EU at this point has told Sony to fk right off and I imagine the CMA will too, it seems that the EU concerns were all based on cloud concerns
This perfectly aligns with MS, as soon as the meeting with the EC on Feb 21st finished, Brad Smith made an announced that they partnered with Nvidia and since then other cloud providers
As the EU should really due to the fact that PlayStation is so dominant in Europe compared to Xbox. In fact, in my opinion it is actually an argument for the deal if Microsoft made CoD exclusive since it would increase competition.
Doesn’t matter whether you include it as a closing condition or not…Microsoft will always need U.K. approval. And it will always be as key as the ftc and eu I’m afraid. It’s just too big of a market.
I suspect the CMA will have their wings clipped somehow because their inflexibility is going to be noted. Should they block this or insist on divestment,
I don’t see why it’s treated on par with the EU and US. Big important market, for sure but one of the top 3? It annoys me, irrationally, that these companies for whatever reason don’t seem to give a shit about other big markets.
It’s way over my pay grade, but I still don’t know what would happen if say, Australia were the only market to reject the deal. MS would close the deal, and then pull out of Australia? Stay in the market and take huge fines?
Sorry, I know you can’t answer that, but it’s something no one seems to talk about.
If the CMA blocks this deal, I do think they’ll be under huge pressure to reform. You can’t have a single regulator swinging their dick around like this.
I believe U.K. is somewhere between 20-30% of Microsoft’s revenue. It’s impossible to fully tell as it’s funnelled through Ireland and eu but I believe that’s about where it lies.
In 2022, the UK accounted for around $5.2 billion of Microsoft’s total revenue of $198 billion. The UK accounts for only 2.6% of Microsoft’s total yearly revenue.
Honestly, if Sony doesn’t sign the contract by the time the acquisition complete, I would not release it on PS. Treat it like a cable company, put the blame on the one who is not allowing it.
The thing that annoys me about the CMA the most is that they specifically state they want actions taken worldwide…to fix an issue they imagine for UK consumers.
MS could come out and say that EA will publish CoD in the UK with a remit to publish on every available device cloud or local with the same terms. Why the fuck would that not be suitable for UK consumers?
Watching the news cycle regarding this acquisition has been fascinating, regulators being tough on MS has resulted in some major benefits for future customer choice (giving full access to Microsoft’s entire gaming portfolio to multiple cloud providers is potentially amazing), but at the same time there’s some major disconnect between how Microsoft has been acting as a corporation for the past decade and the arguments the opponents of the deal have been making.
In 2013 (or thereabouts) Microsoft had to eat a massive humble pie by having their initiatives - that it introduced to the their corporate benefit at the expense of how their users had interacted with their products - completely rejected by the market, namely the Windows 8 interface and store and the early Xbox One policies, that it accepted the fact that it can’t have one ecosystem to rule them all and that they need to meet its customers where they’re at. So we have the Office suite on MacOS, we have Visual Studio Code on all the relevant OSes (free and open source, but still an important product for MS). In general, Microsoft know it can’t outcompete every rival on every front, so it’s focused on reaching as many people as possible while still sustaining their long-time platforms and making sure they have unique selling points.
So if Microsoft acquires something that’s already massively popular on competing platforms, it’s not going pull that product from those platform to coerce a small percentage of its userbase and cut off the rest loyal to that competing platform. That’s not its modus operandi and hasn’t been for a while. Microsoft does not want to have its presence in the gaming space hinging on the fate of its console platform. Consoles are simply too volatile, you can have a successful console like a Wii or a 360 and a heavily underperforming follow-up (though Playstation’s presence has been relatively stable). Instead, MS wants to have its presence on every major facet of gaming, so that it could reach those mythical 3 billion gamers in one way or another.
The funny thing is Microsoft has been pretty open about why it’s acquiring ABK - to increase its presence on mobile, PC and to have a profitable cash cow that they’re going to milk for all it’s worth. Conspiracy theories about MS introducing bugs to the final steal Playstation’s users are laughable. Even if the calculus was slightly in favor on making COD XBox/PC only (which it doesn’t appear to be), Microsoft would not backtrack on the public commitments it has been making for the past year. Spencer said he intends to release COD on Playstation as long as there’s Playstation to play on, etc. etc. MS is not going to burn the goodwill of regulators by openly breaking such promises, the reason for that being they have too much going on other fronts and relatively little to gain or lose from COD’s presence. Eg. through the investment into OpenAI, Microsoft is at the forefront of the AI development, groundbreaking tech that’s going to rapidly change the modern society. Imagine governments using Microsoft’s finnicky behavior in the gaming space as a reason to hamstring and regulate its behavior in the AI space.
That said, Microsoft does want to increase its marketshare in the console market and IMO they still have a shot of doing so, even if the momentum is not super strong at the moment. All the investment they made half a decade ago into their first party studios is yet to bear fruit, but once big hitters start releasing (and if they deliver), on top of having fantastic value, players on other consoles might start feeling the burn of not owning an Xbox similar to how Xbox-only players feel the burn when a huge title is releasing on Playstation on Switch only. It’s going to be interesting few years ahead, Starfield is probably the first big test for the ‘new’ Microsoft since they started taking gaming seriously back in 2018.
