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Microsoft / Activision deal prevented to protect innovation and choice in cloud gaming

The CMA has prevented Microsoft’s proposed purchase of Activision over concerns the deal would alter the future of the fast-growing cloud gaming market, leading to reduced innovation and less choice for UK gamers over the years to come.

  • Microsoft’s solution had significant shortcomings and would require regulatory oversight by CMA
  • Panel Chair: “Cloud gaming needs a free, competitive market to drive innovation and choice”

Microsoft’s proposal contained a number of significant shortcomings connected with the growing and fast-moving nature of cloud gaming services:

  • It did not sufficiently cover different cloud gaming service business models, including multigame subscription services.
  • It was not sufficiently open to providers who might wish to offer versions of games on PC operating systems other than Windows.
  • It would standardise the terms and conditions on which games are available, as opposed to them being determined by the dynamism and creativity of competition in the market, as would be expected in the absence of the merger.

Given the remedy applies only to a defined set of Activision games, which can be streamed only in a defined set of cloud gaming services, provided they are purchased in a defined set of online stores, there are significant risks of disagreement and conflict between Microsoft and cloud gaming service providers, particularly over a ten-year period in a rapidly changing market.

Accepting Microsoft’s remedy would inevitably require some degree of regulatory oversight by the CMA. By contrast, preventing the merger would effectively allow market forces to continue to operate and shape the development of cloud gaming without this regulatory intervention.


Update: UK governments respond to MS/ABK criticism? 

In a sneaky post by the British PM on LinkedIn, Sunak announced he's "cutting red tape" and this announcement includes the obvious right-wing buzz words like "de-regulations" and being "friendly to businesses" and targeting regulators. The statement in full can be read here (exclusively on a Microsoft-owned social platform, of all platforms). The following are some notable snippets:

    • 2. We’ll reform the Better Regulation Framework so that regulation is the last, not the first, response of government. This is game-changing in the way we approach British business as it ensures that regulation at the heart of government decisions is streamlined and forward-looking.    
    • 3. We’ll make sure regulators are laser-focused on prioritising economic growth by ensuring regulatory action is taken only when it’s needed. We expect all regulators to be working towards economic growth, so we’ll lead a consultation on refreshed guidance to help them achieve this. 
    • 5. We’ll encourage innovation, investment and growth by announcing two strategic policy statements to steer our regulators. This week we’ve published the first of three statements for consultation on energy policy. Next up is our strategic steer to the Competition and Markets Authority (CMA).
    • The reforms we are announcing this week represent an important change in approach and send a clear signal to regulators that our number one priority is growing the economy.

Commenting on the package of measures, Business and Trade Secretary, Kemi Badenoch said:

    • “I have listened to the concerns of business of all sizes and have made it a priority to tackle the red tape that holds back UK firms, reduces their competitiveness in global markets and hampers their growth. We are taking back control of our laws after Brexit, reducing and improving regulation and giving businesses the freedom to do what they do best – sell innovative products, create jobs and grow the economy.”

However, Unite, the UK’s leading union slammed the announcement branded it a “boost for bad bosses”;

    • Unite general secretary Sharon Graham said: “The government so-called attack on red tape is nothing more than a boost for bad bosses and will pile more misery on workers. Removing the requirement for employers to record workers’ hours, means that the regulations effectively become unenforceable. Unscrupulous employers will use these emasculated regulations to exploit young or unorganised workers. Cutting red tape? More like a playbook for profiteering”


Update, 15th of May, 2023:

Last edited by LurkerJ - on 15 May 2023