If MS sunsetted Xcloud in the UK it would effectively eliminate the CMAs avergence against behavioral remedies. They wouldn’t have to “police it” and it would eliminate any “market leader” bullshit they could fling. Globally, its not their problem.
When they decide to bring it back down the line, other cloud platforms would have had the games a while and see Microsoft didn’t bs about it, not to mention in the UK would be behind everyone (not for long though)…alternatively, they could move all their Xblades to Ireland.
Saying that, its the CMA, they will make something else up.
They need to identify a significant lessening of competition. They identify that as Microsoft with ABK having a unique advnatage in the cloud market segment due to the collection of technology and ability to withold activision games from other cloud providers while receieving them themselves. If Microsoft doesnt have cloud in the UK and doesnt receieve Activision games on cloud in the UK then there can be no advantage that causes a significant lessening of competition.
The only power the CMA has is determining a SLC, essential national security related item, or monopoly in an acquisition/merger in order to proceed with a block.
I’m in the mindset that the CMA won’t listen even if the CAT rules against them, but Microsoft will fight because this sets a very bad precedent for them and might actually affect their growth as a company. One thing they can do is to complain to their senators and congressmen and show them this ruling and tell them that this pose a risk to American companies and that these rogue regulators go against American interest.
To be clear, I think acquisitions of mid to large size game studios would not be affected by this. But any publisher, and MS business acquisitions overall outside of gaming might be which is one of the reaosn they are going to go through the appeal process.
So I’ll summarize what I think is MS’s best shot outside UK minister overriding the CMA out of the blue.
Argue that prohibition is disproportionate considering the deal encompasses the entire gaming market which includes console, PC and mobile, which is over $200 billion revenue yearly. The cloud SLC is in a market currently less than 3% of that, and will not grow to more than 5% in the foreseeable future. CMA’s own merger guidelines state that remedies should not be restrictive, and preserve RCBs.
Argue that ABK games were not going to cloud in the foreseeable future.
Argue that COD going to Nintendo RCB and Xbox games going to other cloud services RCB is ignored and diminished irrationally. Prohibition also eliminates the RCBs.
Argue that cloud market share was calculated incorrectly.
Argue that Playstation and Nintendo currently do not participate in the cloud gaming market due to incentives. The effects of their eventual full entry on ameliorating the SLC should be explored and counted, since COD will be on those services due to the incentives that led to dismissal of the console SLC.
The decision to exclude cloud agreements from the analysis because they dont trust Microsoft is irrational and is unsupported by decades of upholding agreements with suppliers and regulatory bodies.
The elimination of the benefits for competitors in the cloud market harms the cloud market more than allowing the deal.
Its irrational to claim Microsoft will make Activision games exclusive on cloud after the agreement ends if the cloud market develops as the CMA claims. Microsoft would have grown and developed a large base of fans on many platforms and it would be the equivalent of such that they make COD or WOW exclsuive to Xbox in the console market. The CMA already determined that was not logical, so its fully contradictory and irrational to claim here as well.
If Microsoft wins in court but is still blocked on some bogus basis (eg. ‘Apple will be foreclosed if MS takes Candy Crash off App Store’), the political hell Microsoft will raise will make the UK politicians regret they did not change this broken system years ago.
MS to pull out of the UK ? All most every PC in the NHS, Schools and the MOD will be using windows and also paying the top wack to have them and you want to put all that at risk and MS rep, over a videogame deal?
The special relationship is really nothing more than code for Military Intelligence sharing, for which no-one comes close to the data shared with the USA by the UK . You want to end of all that and have every major civilised country around the world reevaluate their use of Windows (because MS rep will be in the gutter) all over a videogame deal?
While I am on the side it’s most likely blocked or it’s better to think it’s blocked, we did have the whole console SLC reversal which was a huge deal and no one expected to happen so crazy stuff can still happen.
No, not over a video game deal. Over a rogue regulator waging a trade war and threatening the very future of companies like Microsoft.
Continuing to do business in the UK is not worth the UK going after every acquisition you make, and some that you have already made. For instance Microsofts ability to compete with Google on the search engine front is tied to their ability to have a differentiated, improved search functionality speed by their unique relationship with OpenAI. The UK has already signaled they intend to go and limit AI next, and the prime target is Microsoft and OpenAI. To Microsoft, that is potentially hundreds of billions of dollars, repeating, in revenue.
So please, recognize that this is more about the precedent and empowerment that the CMA would gain and big tech (and to be fair is really all foreign companies) would lose. This is a rogue regulator on an ideological crusade that believes they are judge, jury and executioner.
As far as the other comments about that causing other countries to reevaluate Microsoft, thats highly doubtful. Countries do not like infrastructure cha ge and dont have to money set aside for it. They also dont have rogue regulators and no checks and balances. This is a uniquely UK problem.