Shareholders want to sell and have agreed to already. They don’t want to own ABK anymore, they aren’t concerned with what future ABK stock might be worth.
They are concerned that a regulator hasn’t done their homework and stated that not only can’t ABK be sold for the minutest of reasons, but it can’t be sold for 10 years to the only one interested (and able).
Their share price will tank if Microsofts appeal fails. Their share price will tank if they give up. The only way it doesnt is if the sale passes. Hence extension. Hence fight.
So if every other regulator in the world approves this deal and doesnt see the cloud as a potential theory of harm then what happens? Lets say MS says screw it CoD is not allowed to be played on Xcloud in the UK, we concede that. That addresses all cloud concerns so How can the CMA still block the deal? It would be highly unreasonable and give MS justification to act unreasonable as well.
The CMA will block the deal,because they want to block the deal. Like the FTC. No good reasons, so inventing them. Evidence to the counter-factual will be dismissed and ignored.
I doubt Microsoft will have a hard job overturning this at tribunal. Their play will be that the CMA doesn’t get to look at it again.
I don’t think the CMA will care until Europe has a massive shortage in tech growth that it directly affects them. Maybe going back to the stone ages might be a good thing for Europe for a while.
The EU have cloud concerns too. They just mind behavioural remedies less. Also not putting cod on xcloud or all ABK games on xcloud wouldn’t necessarily be a remedy because it still means ms hold the IP and therefore in the CMA’s eyes have arbitrary control over the market.
What would be a remedy would be to divest xcloud.
Basically the way the CMA operate with all these futures digital markets (not just this deal but generally) the only acceptable remedy is to divorce the deal from the market to which the SLC applies. So it means divesting xcloud. Or spinning it out. The provision arm of it at least.
That’s not how UK law works. MS don’t have a play. They have to follow the CAT and they will remit back to cma at best. That’s the best they can achieve here.
No. At best the CAT will throw out the cloud concern on account of its limit to 5000 people being too small to be a concern and Microsoft can press for the CAT rule on the deal themselves.
Yes, that was sarcastic, don’t take my comment seriously.
I was mainly wondering if it was possible to compensate for the temporary loss of the UK market by investing in other regions, and put pressure on the CMA, but all this seems more complicated than it seems. I hope that Microsoft will find solutions to accept the deal and that the regulators will be more reasonable and competent.
MS said it has cloud infraestruture to allow 5000 concurrent players on UK Xcloud. To divest Xcloud because of this seems completly absurd, would be much easier just to pull the service out of UK. This over protection is going to make cloud gaming never be a thing. Not by chance the providers are in favour of this deal. Having COD and Xbox games in their services will help to popularize their services as well. CMA is doing a disservice for cloud gaming.
The path forward is to crush the CMA case in appeal and destroy every shred of their argument and expose irrationality at every bend so they overturn the CMA ruling.
Every single other path will be painful for Microsoft and cost them billions.
The other way to look at it is if the cloud market is so small and insignificant why wouldn’t they divest their cloud gaming business to get the deal done?
Honestly its just best to assume they(CMA) are not arguing in good faith. Alot of their arguments are speculative and hypothetical and they can get away with it because the laws regarding antitrust matters in the UK is basically build around them. It doesn’t have the check and balances principle like in the U.S. where the courts actually looks for the constitutionality of said decision(CAT is not judiciary body, correct me if I’m wrong). The U.K. has their own rules, I respect that, but decisions that affect global operations is where questions are asked.
The other way to look at it is if the cloud market is so small and insignificant why wouldn’t they divest their cloud gaming business to get the deal done
If that were a genuine solution they might consider it. One CMA ruling, the acquirer offered to sell some userbase (customers) to a competitor and as a competition remedy and they still said no.
Even if MS killed Xcloud in the UK they would just say “we do not believe it would be effective”. They were overruled by CAT for making decisions without compelling evidence.
However, the Competition Appeal Tribunal (CAT) has now overturned the CMA’s decision, essentially because the evidence relied on by the CMA to show anti-competitive effects was merely “anecdotal”, lacked depth and consistency with the CMA’s theory of harm and was untestable. Other relevant factors included that the CMA’s approach to market definition was materially wrong, and the CAT also suggested that wide MFNs would not necessarily be effective save in the most egregious of cases and did not consider the theoretical argument against wide MFNs to be particularly strong in the markets under consideration.
I don’t know about divesting XCloud entirely. But I do wonder if Microsoft could split up their XCloud department where half of it becomes independent and not associated with Xbox.