The gloves are off! Microsoft’s appeal against the Competition and Markets Authority (CMA) has begun. Although the full appeal documents won’t be made public, the Tribunal has published a summary of the main points. During the hearing, Activision’s lawyer pointed out inconsistencies in the CMA’s decision and alleges that they only spent 4 weeks focusing on the potential effects of cloud gaming.
In short, the reason this argument is highlighted is because the CMA used the cloud gaming point as its basis for disallowing the merger to happen.
Activision’s lawyer alleges the CMA only spent 4 weeks focusing on cloud gaming
Here is what Activision’s lawyer had to say on the matter during the Competition Appeal Tribunal hearing:
“The vast majority of the time taken by the CMA, in the 32 weeks it spent investigating, 28 weeks were devoted to their first concern, that there has been or would be some anti-competitive conduct in result if this merger would be permitted in the respect of the console market.”
“The back-end of the 32 weeks dealt with the cloud story. Of course, at the end of the day, contrary to many expectations, they decided that the console side of the story was okay. There was no problem there. And so at the end of the day, the reason why we’ve lost, is because of their views in relation to the console story.
“One of the aspects of the console bit of the debate was the foreclosure argument, that was rejected. And so you have it one at the same time that the conclusion, ‘well, we don’t think there’s going to be a valid foreclosure argument in relation to the console story, but we do think that there will be foreclosure, or a likelihood of the outcome of foreclosure in respect to these competitors not being able to get access to these Activision games, in respect to the cloud.’
“On the face of it, that is a remarkable pair of conclusions. They are diametrically opposite of each other, and one wonders what the purpose of that would be, and why anybody would behave in that way, given that finding the other way that we know about.”
The reason the CMA blocked the merger in the first place was because they argued that it would significantly reduce the competition in the cloud gaming market. However, Activision had no plans to put its titles on cloud gaming services, a point reiterated by Activision’s legal representative.
The list of countries approving the merger continues to grow, with over 30 nations happy for the deal to go ahead. There’s no doubt that we are in for a lengthy appeals process, so we’ll have to wait and see which side comes out of it alive.
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