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EpicRandy on 19 May 2023
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I've been reading a little more about the CMA decision to know what is their definition of the "cloud gaming market". and they seem to literally mix Cloud streaming and subscription-based content library together either conveniently or by lack of actually thinking things through. 

There are essentially 2 distinct business models with the cloud;

  1. Cloud streaming as a service for your own game BYOG.
  2. subscription-based content library service to which distribution can be achieved through:
    1. Cloud streaming
    2. Download and install on hardware
    3. a mix of both

There are no other distinct options but they can be mixed together to form a hybrid offering. (An actor having its own store and cloud streaming its content will fall in #1 in regards to the cloud service)

The CMA fails to distinguish between the 2 sufficiently IMO. Only number 1 can be considered its own cloud market, for number 2 cloud is only an optional feature/mean of distributing said subscription service content.

What the CMA conclusion Are:

Regarding number 1: MS is not actually competing in this category directly. The only concern here is the assumption that MS could eventually propose Xcoud as a standalone service and leverage its content. Some passages of the CMA decision allude to this exactly. All MS remedies propositions are actually more than enough to resolve any issue with this specific market and the CMA actually attests to this by signaling that the remedies were actually disregarded due to other business models (no 2).

This is also where the EU has highlighted the necessity for remedies.

Regarding 2: The CMA has no issue,  as they would actually need to provide an SLC for the Subscription base game library market which they themselves do not view as a separate market but a simple distribution medium.

The EU also has come to the same conclusion on this. no SLC for this market or no market by itself

So where are the CMA issues if they both agree:

By deduction, the CMA concern rises solely because an actor can limit itself to 2 with option 2.1 (subscription-based content library with cloud streaming as the only delivery method). but here's the issue, this market does not actually exist and even if it would, it should be actually resolved by either the remedies proposed to address number 1 or the actual non-issue found by the CMA for the whole number 2.

In this reasoning, the CMA fails to assess/mention:

  • Why do they think an actor solely doing 2.1 cannot change to doing  2.3 at any time which would be making any MS concession/remedies for it at risk of making said concession for a market the CMA themselves evaluated at no risk of SLC? 
  • They also fail to assess why an entity doing solely 2.1 should be of MS concern as it is a decision that solely arises as a business decision of that particular actor and no content actually exist that would force an actor into this model.
    • If said content is eventually made, the merger does not provide an advantage to MS as said content needs to be built from scratch which de facto places anyone on equal footing.
    • Ms also have only limited incentive to produce such content that would not synergize with their console offering.
  • Currents popular ABK franchises cannot be changed to cater to this model specifically without drastically reducing its pool of users thus creating only very limited added appeal to any such actors that would be able to license ABK contents without exclusivity and the CMA conclusion is kind of prohibiting ABK from any exclusivity deals in this regards.

The CMA pads those shortcomings by stating the cloud market is fast-evolving and remedies are hard to enforce.

But the thing is the hard-to-enforce conclusion has been destroyed by the EU and this market is not fast evolving at all which can be assessed in 2 ways:

  • (Business models) those models listed above are pretty much an exhaustive list of what can exist in regard to the cloud. any new models will only fall into 1 or a mix of those variations.
  • (Technology) Ms does not produce hardware itself making them dependent on 3rd parties that have many other clients able to request as much as MS themselves. Also, the ABK transaction does not impact this in any way.

All in all, the conclusion of the CMA in its current form cannot exist without either contradicting itself or catering to a non-existent market.

Last edited by EpicRandy - on 19 May 2023