- Software giant lays out grounds for CMA ruling appeal
- Claims competition watchdog doesn’t get cloud gaming
- CMA to fight Microsoft in tribunal court
Microsoft (MSFT:NASDAQ) claims that the UK’s competition regulator has got it all wrong over the software giant’s blocked $69 billion Activision (ATVI:NASDAQ) deal and has set out plans to challenge the ruling.
The UK’s Competition and Mergers Authority, or CMA, blocked the deal in April saying it could hurt competition in the nascent cloud gaming market, sparking an angry war of words.
Microsoft claims ‘fundamental errors’ in the CMA’s assessment of its cloud gaming services and that its conclusion that the deal would lead to a substantial lessening of competition in the UK’s cloud gaming market was wrong, according to summary of its arguments to the UK’s Competition Appeal Tribunal.
‘FUNDAMENTAL ERRORS’
The CMA ‘made fundamental errors in its calculation and assessment of market share data for cloud gaming services by failing to take account of constraints from native gaming (where gamers access games installed on their devices through a digital download or physical disc),’ Microsoft will say at the hearing.
Setting out five grounds for appeal in total, the Washington state-based company said it would challenge the CMA’s understanding of the cloud gaming market and the impact of the deal.
The CMA’s decision was ‘flawed for multiple reasons, including its overestimation of the role of cloud streaming in the gaming market and our position in it, as well as its unwillingness to consider solutions that received overwhelming industry and public support,’ said Rima Alaily, Microsoft Corporate Vice President and Deputy General Counsel.
‘We are confident in the strength of our appeal and the binding commitments we have made to increase competition and choice for players today and in the future.’
Appeals against CMA rulings are heard by the Competition Appeals Tribunal, which makes a judgment on the merits of the decision, and it is not an opportunity for Microsoft to submit new remedies.
MULTIPLE FRONTS FIGHT
The EU’s competition authorities approved the deal earlier this month after they accepted remedies put forward by Microsoft that were broadly comparable to those it proposed in the UK. Microsoft has also appealed the US Federal Trade Commission’s action seeking to block the deal on the grounds that, the agency said, it would suppress competition.
In response, the CMA reiterated its position, with a spokesperson saying: ‘We prohibited this deal as we had concerns that it would reduce innovation and choice in the cloud gaming market in the UK. We will defend our position in court.’
Activision shares dropped off a cliff late last month (April) when the CMA handed down its ruling, losing more than $12 billion of market value. The stock is currently valued at $78.66, giving the company a $61.8 billion capitalisation.
In contrast, Microsoft shares have made sharp gains since the start of 2023, up nearly 39% at $332.89.
