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EpicRandy on 16 May 2023
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Ryuu96 said:
EpicRandy said:

True, but, IMO  it's another argument as to why MS should just pause their Xcloud Initiative globally and close the deal. The breakup fee alone already amount to several year worths of XCloud revenue after all. 

I'm thinking MS could just be waiting for the EU to approve and maybe some other market too, then they'll "pause" Xcloud globally and close over the FTC. Also, MS could just license their XCloud server to a third party and contract them to offer the same experience with GPU essentially making CMA conclusion a non-standing issue and still be feature complete on GPU and still be able to bring some revenue from Xcloud technologies.

Anyway Still think it's unlikely, something like 25%, but the more I think about this route and all the possibilities MS would have to mitigate any losses and the undeniable extreme benefits of closing the deals the more I think MS would be very dumb not to shelve Xcloud for 4-5 years.

There's no way around it now though, CMA has blocked the deal, Microsoft can't offer anymore concessions until it goes through CAT first and that will go way beyond the merger agreement date, negotiations with CMA are finished and can't be re-opened. As long as they don't have CMA's approval, they can't close the deal.

Idas estimated that the breakup fee would increase to $5bn-$8bn and looking at Activision-Blizzard's current market cap, Microsoft acquired them at a 45% premium back then for $69bn cash so if we use the same 45% premium, they'd now be acquiring Activision-Blizzard now for $96bn if I've got that right, Lol.

In addition, Microsoft's market value actually increased when the news broke of CMA blocking the deal so I wonder if MS shareholders even want ABK.

Did a little more research on this and sadly you are right, MS cannot leave the cloud market to resolve the cloud issue without it being first sent back to the CMA. 

Ms would have to completely write off doing business in UK to circumvent the block.

Now the only "victory" paths I see are.

1)  MS settle out of court with the CMA during the appeal process with new proposals. (Even if those proposals are not admissible in the CAT appeal they can always be proposed to the CMA. If the odds looks to be stacked against them in the process it may incentivize the CMA to do so and claim victory over a BIG-Tech) 

2) (best scenario) MS win against the CMA, and the CAT only quash the cloud SLC and tells the CMA they have to adjudicate the cloud SLC again with specific instructions. MS could then propose new remedies including leaving the cloud gaming market altogether or completely leaving out established ABK Ips from their cloud offering leaving the CMA with 0 ground to block again on the cloud SLC.

3)MS wins against the CMA and the CAT send the case in remittal of phase 2, MS could still propose everything highlighted in #2 but the CMA would be free to find anything else to block again on other concern.

all in all, I say my confidence is now about 66% that MS win something with the CAT, but only about 33% that the CMA come to another conclusion.

ps: I base the 66% chance of some win with the CAT on the fact no independent expert, no other regulation to date, and no actual competitor in the cloud market have come to the same conclusion or results as the CMA making it easier for MS to show irrationality and/or breach of procedure IMO.