Microsoft's Appeal is Here
In summary, the Applicant challenges these decisions on the following grounds:
1) Ground 1: The Respondent made fundamental errors in its assessment of the Applicant’s current position in cloud gaming services by failing to take account of constraints from native gaming (whereby gamers access games installed on their devices through a digital download or physical disc), undermining its SLC finding:
a) In its market definition analysis, the Respondent failed to consider potential switching to native gaming, resulting in a flawed conclusion that cloud gaming services fall in a separate product market.
b) Even on the Respondent’s erroneous, narrow, market definition, the Respondent failed to take into account relevant out-of-market constraints from native gaming in its competitive assessment of vertical foreclosure effects.
c) The Respondent made fundamental errors in its calculation and assessment of market share data for cloud gaming services and as a result failed to take into account relevant considerations in its competitive assessment.
2) Ground 2: The Respondent erred in failing to take proper account of three long-term commercial agreements which the Applicant had entered into with cloud gaming providers for the licensing of rights to stream its games, including Activision’s gaming content, post-Merger (the “Agreements”) in its assessment.
3) Ground 3: The Respondent’s finding that Activision would have been likely to make its gaming content available on cloud gaming services absent the Merger was irrational and arrived at in a procedurally unfair manner.
4) Ground 4: The Respondent’s findings that the Applicant would have the ability and incentive to foreclose rival cloud gaming services by withholding access to Activision’s gaming content post-Merger was unlawful. In particular, the Respondent’s analysis was affected by four errors, each of which in isolation, separately, and/or cumulatively, renders the findings on ability and incentive unlawful, irrational and/or disproportionate.
a) The Respondent wrongly relied on evidence that so-called ‘AAA’ games would be important for cloud gaming services to find that Activision games in particular would hold such importance.
b) The Respondent failed to take account of relevant evidence regarding immediate losses from hypothetical foreclosure, which showed that the Applicant would not have an incentive to withhold access to Activision games from cloud gaming rivals.
c) As set out in Ground 1 and Ground 2, the Respondent wrongly failed to take account of (i) relevant out-of-market constraints and (ii) the Agreements.
5) Ground 5: In assessing remedial action for the SLC, the Respondent:
a) Erred in law by proceeding on the basis that it had a duty to impose what it described as a comprehensive remedy, thus failing to consider a range of remedies and assess their benefits and detriments in the round;
b) Unlawfully failed to take account of the interests of comity;
c) Erred in rejecting the Microsoft Cloud Remedy, which rejection was in all the circumstances disproportionate; and
d) Acted in breach of the Respondent’s common law duty of fairness and the CMA’s own remedies guidance.
The Applicant seeks the following relief from the Tribunal:
1. An order pursuant to section 120(5)(a) of the Act quashing the Decision in its entirety;
2. An order that the Respondent pays the Applicant’s costs of this Application;
3. Such further or other relief as the Tribunal deems fit.
1590/4/12/23 Microsoft Corporation v Competition and Markets Authority - Summary of application | 26 May 2023