- Microsoft is appealing Britain’s decision to block its $69 billion takeover of Activision Blizzard, citing “fundamental errors” in the assessment of its cloud gaming services.
- The company argued that the CMA’s conclusion that the deal would lead to a substantial lessening of competition was based on a “fundamental misunderstanding” of the cloud gaming market and the role that Microsoft’s Xbox Game Pass service plays in it.
- The appeal is likely to be closely watched by other companies in the gaming industry, as well as by regulators and investors, and could have significant implications for the cloud gaming market as a whole.
London, UK – Microsoft has outlined the basis for Activision’s appeal against the UK regulator concerning its purchase of the popular video game developer King Digital Entertainment.
It is alleged that the Competition and Markets Authority (CMA) was wrong to conclude that the acquisition would harm competition in the UK market. In a statement, Microsoft said that the CMA’s analysis ignored the intense competition from other mobile and console game developers, and misjudged the scale and impact of the acquisition.
According to Microsoft, the CMA failed to take into account the many free-to-play mobile games in the market and the fact that King Digital’s revenues largely come from in-game purchases, which tend to be incremental rather than requiring upfront payments. The company further argued that the CMA’s analysis relied too heavily on quantitative data and failed to consider the qualitative aspects of competition.
“Microsoft is confident that the regulatory decision was flawed and that Activision has strong grounds to appeal,” said the statement.
Activision, for its part, said that it was disappointed by the CMA’s decision and that it believes that the acquisition will benefit consumers by allowing King Digital to draw on Activision’s resources and expertise to develop new and innovative products.
The case is being closely watched by the video game industry, as it will set a precedent for future acquisitions in the sector. The CMA’s decision could also have implications for the wider tech industry, which has been facing increasing scrutiny from regulators around the world.