The Cloud Remedy is Not Long Enough (page 367)

The Microsoft Cloud Remedy has a duration of ten years. We note that some third parties told us that this was a sufficient duration to remedy the SLC. However, the SLC in cloud gaming services that we have found arises from a structural change in the market. As a result, the SLC and the adverse effects arising from it are not time limited and could endure beyond ten years. Although we recognise the possibility that the changing nature of the market might result in circumstances where the SLC may no longer apply, we do not have a high degree of confidence in such an outcome. While the Consumer and Streaming Provider Licences are perpetual, the other protections and commitments of the remedy, including monitoring and enforcement, would expire after ten years, leaving it materially weaker.

Our view is that the time-limited nature of the Microsoft Cloud Remedy is a clear and further weakness in terms of its effectiveness as a comprehensive solution to the SLC. While the duration of the remedy could be extended, or the end-date removed, this would create additional risks in terms of specification in the context of obsolescence and/or distortion of the market, and in terms of effective monitoring.

1429/4/12/21 Meta Platforms, Inc. v Competition and Markets Authority - Judgment | 14 Jun 2022 (Catribunal.org.uk)

Assessment of impairment to dynamic competition will almost always involve consideration of expectations (i.e. an outcome with a more than 50% chance). Clearly, that outcome will involve consideration of multiple factors, but we doubt very much (although of course every case must turn on its facts) if an impairment to dynamic competition that is not thought to manifest itself within five years at the outside can be considered to be an expectation. The world is simply not that predictable.

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CAT told CMA previously they should only assess risks to a market over a 5 year period because more than that is too hard to predict.

No One Can Predict the Evolution of the Cloud Gaming Market: The Cma, MS, Abk or Third Parties (Page 368)

Cloud gaming is an early-stage and growing dynamic market, and there is considerable uncertainty as to how it will develop and what competing business models will emerge. We believe, for the reasons set out in detail in Chapter 8, that foreclosure of Microsoft's rivals in cloud gaming services may be expected to result in substantial harm to competition in this market. We recognise that we cannot predict with any certainty how exactly the market might evolve absent the Merger (or if the Merger is allowed to proceed on the basis of the Microsoft Cloud Remedy). Neither, in our view, can the Parties or third parties. We consider this represents an inherent specification risk in the Microsoft Cloud Remedy – even if the remedy could be well-specified to cover the current status of the market, it may not be suited to future changes. This means that we cannot have a high degree of confidence that the terms of the remedy would be sufficiently well-specified to address these unpredictable market changes.

The Cloud Remedy Is Hard to Monitor (Page 371)

The remedy essentially proposes that the CMA would oversee various arrangements that seek to regulate the behaviour of global firms in a complex technological sector that is subject to rapid growth, evolving business models and changing commercial practices. Notwithstanding the appointment of a Monitoring Trustee, the Microsoft Cloud Remedy is likely to place significant demands on CMA resources for the duration of its proposed term, principally through the CMA's extensive monitoring and enforcement responsibilities across the broad scope of the remedy, its oversight and governance of the Monitoring Trustee and any of its advisers, and its participation in any dispute resolution process.

The Microsoft Cloud Remedy requires the interaction of a number of third parties and processes (eg Microsoft's Compliance Director, reporting requirements, Monitoring Trustee, third party dispute resolution), each contributing to the monitoring and enforcement of the remedy. While there is a need for the involvement of these different parties, the resulting organisational complexity creates an additional challenge in ensuring that the Microsoft Cloud Remedy is monitored and enforced effectively in the longer-term.

A Third Party (Very Likely Sony) Would Consider to Add Its Own First Party Games on Its Subscription Service if MS Were to Offer Cod on Game Pass (Page 376)

One third party ([REDACTED]) told us that any behavioural commitment from Microsoft to grant rivals access to CoD could pose a risk for consumers, as there are numerous ways Microsoft could withhold or degrade access which would be 'extremely difficult to monitor and police'.

The same third party also told us that adding CoD to Game Pass would be a 'good thing' for existing Game Pass subscribers who play CoD, but that a larger population of [REDACTED] gamers would suffer due to the foreclosure strategies Microsoft could engage in. This third party told us that it would have to consider adding its own first-party content day and date on its subscription platform if Microsoft were to offer CoD day and date on Game Pass, but that doing so would diminish its incentives to invest in its first-party content and would not be good for its gamers.

Lol I have been saying this for months. Sony position is mostly fueled because they don't want GamePass to be so succesfull that it force them to follow suit with day one game and reduced profit margins.

Prohibition of the Merger Also Means That MS and Abk Won’t Be Able to Try Again for the Next 10 Years (Page 336)

Prohibition would be effected by accepting undertakings under section 82 of the Act or making an order under section 84 of the Act, prohibiting the Merger and preventing the Parties from attempting to merge for a further period: our normal practice would be to prevent a future merger between the Parties for the next ten years, absent a change of circumstances.

MS Thought That Prohibiting the Merger Would Preserve the Status Quo of Sony and Google (Page 337)

Further, Microsoft submitted that the 'two key complainants' against the deal (SIE and Google) have many reasons to preserve the status quo or undermine the Merger in order to extract higher profits to the detriment of game developers and gamers. It submitted that, on this basis, the Microsoft Cloud Remedy protects competition in a way that prohibition will not. Microsoft submitted that 'through prohibition, the CMA is ensuring the ongoing success of entrenched competitors who have no incentive to expand competition'.

A Third Party Thought That Prohibiting the Merger Could Risk ABK Entering Into a Long Term Exclusivity Deal With MS (Page 337)

One third party ([REDACTED]) told us that prohibition would not be an effective remedy because it disagreed with the SLC finding, and that blocking the Merger could risk Activision entering into long-term exclusivity deals with Microsoft which would have the same effect, in its view, as divestiture of the CoD franchise. Another third party ([REDACTED]) commented that prohibition would be 'detrimental' for the growth of cloud gaming and [REDACTED] players as they would not have access to the CoD title.

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I mean, what is stopping Microsoft from just making an exclusive agreement with Activision after this for CoD on xCloud? Absolutely nothing, aside from the asking price, which Microsoft could meet way more easy than anyone else.

MS Has Tried to Buy at Least One Mobile Games Publisher (Page 394)

We note Microsoft's submission that Activision has significant strength in mobile gaming, and consider that the presence of Activision's games on any mobile gaming store would enhance its competitiveness. However, we also consider that this could be achieved by less anti-competitive means than the Merger, and Microsoft could acquire 'attractive content and experience with player engagement and acquisition' by buying a different mobile games publisher. This appears to have been Microsoft's strategy – it attempted to buy [REDACTED] in [REDACTED], and said [REDACTED].

Call of Duty Wasn’t Coming to Game Pass Until 2025 (Page 397)

On this basis, we would expect that the benefits would start to accrue within a reasonable period (although there would, in practice, likely be some delay between completion of the Merger and CoD arriving on Game Pass in 2025). We therefore find that at least some benefit from the claimed Game Pass RCB may be expected to accrue within a reasonable period, such that the condition in section 30(3)(a) of the Act is satisfied.

Only the Addition of Abk Content to Game Pass Would Generate Relevant Customer Benefits (Rcbs), and Even That One Would Be Below the Expectations of MS (Page 404)

We have found that the following benefits claimed by Microsoft do not constitute RCBs (and, even if they did meet the necessary conditions, would be small and would not have a material impact on the costs of the prohibition remedy):

(a) The claimed Cloud Gaming RCB;

(b) The claimed Nintendo RCB; and

The claimed Mobile Gaming RCB.

We have found that the claimed Game Pass RCB qualifies as an RCB, and can be expected to have annual benefits materially below the £[REDACTED] million per year figures presented by Microsoft. We have also found that the benefits are likely to decline over time. We have not found it necessary (or possible) to estimate the precise amount of the benefit that may be expected to accrue from the claimed Game Pass RCB, given the inherent uncertainties with this exercise. This is in any case not necessary for us to conduct the proportionality assessment as set out below.

We have also found that even if the claimed Cloud Gaming RCB and claimed Nintendo RCB did constitute RCBs, the scale of the benefits would not be material to our assessment.

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They'd be no RCB's for CoD on Switch? Or a Mobile Xbox Store? Or Xbox gamers having parity with PlayStation on this IP which is so important to everyone's success? Or the Cloud companies that have guaranteed access to CoD rather than maybe? Lol.

Tens of millions of gamers in Game Pass having access to CoD is less relevant than the insignificant Cloud market?

Okay that's over.

IDAS IS MVP.

Okay so.

1. Were you drawn to Ultimate due to xCloud?

2. Would you pay extra for xCloud?

For me?

1. Lol, No.

2. Lol, No.

I was thinking, since this generation is kind of looking like a wash for Xbox, with current sales trends suggesting that Xbox Series will lose to PS5 by an even larger margin than XB1 lost to PS4 and their 1st party still being in pretty rough shape, what do you think the chances are that Xbox tries to pull an Xbox 360 by releasing their next-gen Xbox a year before PS6 in order to pull into an early sales lead? Let's say for instance that PS6 is releasing in 2028 and Xbox has caught wind of it, do you think they might release their next Xbox in 2027? Such a move could give them an early sales lead and make them the lead platform for 3rd party development again like they were in gen 7. They could pull into a pretty substantial early lead if they make enough consoles to meet demand, and especially if they were to make Elder Scrolls 6 a launch exclusive for the next-gen Xbox Holiday 2027 instead of making it cross-gen with an Xbox Series release as well. Maybe have Halo Tatanka, which is supposedly being expanded into a full Halo multiplayer experience complete with arena and BTB and forge and such, into a next-gen launch exclusive as well, they could have loads of maps and other content ready if they wait until Holiday 2027 to release it.

Do you think that is a better strategy than waiting and launching the same Holiday season as PS6, just to boost the hardware specs a bit higher and/or launch a bit cheaper a year later?

All I'll say is that I think Microsoft is prepared for this gen to be a wash console sales wise but that doesn't mean they won't try to improve things, I think it's just logical u'know? The two biggest IPs from Bethesda (Elder Scrolls and Fallout) are very unlikely to release on this gen and Microsoft likely already knew that when they acquired them.

Can still sell a good amount and be profitable with what they have planned for this gen though, and have a very strong gen off some of the upcoming releases, a lot of them will be new IPs and growing some studios into bigger names, they won't come close to Sony this gen in terms of console hardware but they have a chance to close the gap next gen after some of these new IPs have grown into big IPs and some of these studios have more brand recognition.

"Lol, No" to both... xCloud is really just an option. I barely used it and yes it is convenient when I need it but I do not care at all if this is part of Ultimate or not :)

I think it depends on when the PS6 launches. Because I have a feeling Sony will want the PS5 gen to last until 2029-2030. If they do end up doing that, maybe MS could release a new console in 2028 and get a headstart over the PS6. Elder Scrolls VI being a launch titles for the next Xbox would certainly move quite a few consoles and be a good start for a next-gen console. But it kind of worries me that we're already talking about a next-gen Xbox not even 3 years into the Series X/S . I think there's some room for Series to turn it around. Hopefully, Starfield is a return to form for Bethesda and can help right the ship for Series X/S.