An EU Commission official has said that the CMA, the UK’s competition regulator, “overstated” Microsoft’s share of the cloud gaming market when making its decision about the pending deal. At the end of April, the CMA blocked Microsoft’s acquisition of Activision Blizzard, with the government authority citing concerns that the deal could harm the growing cloud gaming market and hamper innovation.
Three weeks later, the European Commission approved Microsoft’s Activision Blizzard deal, though with some caveats. Primarily, the Xbox company will be required to automatically license Activision Blizzard titles to other cloud gaming services, which Microsoft President Brad Smith seemed to view as a positive move. But the EU’s decision also further called into question the CMA’s choice to block the acquisition, considering that the two governing bodies should have similar concerns and therefore similar conclusions.
In response to the announcement of the EU’s approval of the Activision Blizzard acquisition, the CMA stated that it stood by its decision. An EU official, on the other hand, said that the UK regulator had “overstated” the position that Microsoft held in the cloud gaming market. In its report, the CMA had declared that the gaming giant already "accounts for an estimated 60-70% of global cloud gaming services." However, it seemed to many people that the regulator had included all Xbox Game Pass subscribers in its calculation, which is not necessarily an accurate interpretation of the numbers.
Xbox Game Pass offers a variety of perks to subscribers, mainly access to a rotating selection of games, including first-party day-one releases. Ultimate members also receive access to EA Play's exclusive library of titles, two free games a month via Xbox Live Gold, discounts, and the ability to stream games using Xbox Cloud Gaming. The CMA’s analysis did not seem to take into account that many gamers who subscribe to Xbox Game Pass Ultimate do so for the free games and sales, and a lot of people have no interest in and don’t use the cloud gaming service.
The EU official who spoke on this element of the CMA’s decision noted that: “For us, [cloud gaming is] not a separate market. It’s a segment of the overall market.” While cloud gaming may indeed see growth in the future, with more people accessing it in a variety of ways, it has not yet found firm ground in the current gaming landscape. This is evidenced by the fairly recent shutdown of Google Stadia and the somewhat niche position of Nvidia’s Geforce Now cloud gaming service.
The Xbox company was aware that its strong presence in cloud gaming could be a barrier to its acquisition of Activision Blizzard and began making deals with third-party cloud gaming platforms. Indeed, Microsoft continued to partner with cloud gaming companies even after the CMA announced that it was blocking the ABK deal. It’s uncertain at this point whether the UK regulator’s decision will ultimately be the death knell of both the acquisition and the pending cloud gaming partnerships.
Sources: Gov.uk, Financial Times