Microsoft has formally appealed the UK's CMA decision to reject its proposed acquisition of Activision Blizzard. The company's reexamination request was filed about a month after the Competition and Markets Authority blocked the Activision Blizzard deal, which also includes mobile gaming giant King.
The CMA's rationale for rejecting the $69 billion acquisition was rooted in a desire to protect competition in the cloud gaming space. According to the agency's preliminary findings, buying the Call of Duty maker would provide Microsoft with too much power in this young, yet rapidly growing industry. Instead of policing the company's cloud gaming business post-acquisition, the CMA concluded that preventing the deal was an easier course of action. Its decision polarized the public and London officials, as even the UK Chancellor seemed displeased that Microsoft's Activision Blizzard acquisition was blocked.
After Microsoft confirmed its intentions to appeal the CMA's ruling in late April, the company officially did so on May 24. The case reexamination request was filed with the Competition Appeal Tribunal, or CAT, a specialist judicial body with multidisciplinary oversight. Microsoft's attorneys listed five grounds for appeal in their application, starting with a claim that the CMA made multiple factual errors in assessing the company's cloud gaming business in terms of content and market share.
The appeal also posits that the regulator failed to properly consider Microsoft's proposed remedies, including decade-long cloud gaming deals with Nvidia GeForce Now, Boosteroid, and Ubitus. The third point concerns the CMA's assessment that Activision Blizzard is likely to bring its titles to cloud gaming platforms independently, which Microsoft's attorneys labeled as "irrational." Moreover, the appeal downplays the importance of AAA games for future cloud gaming growth, dismissing the idea that Microsoft would be incentivized to withhold Activision Blizzard's game catalog from Xbox Cloud Gaming rivals.
The complaint concludes that the CMA's failure to consider a wider range of Microsoft's proposed remedies is both an error of law and stands in contrast to the regulator's own guidance concerning such amendments. The first case management meeting on the petition that might yield a clearer timeline for the appeal is scheduled for May 30.
A successful complaint would result in the CAT requesting a revised decision from the CMA, instructing it to take whatever grounds for appeal end up being accepted into account while reexamining the proposal. Although Microsoft has technically been free to close the Activision Blizzard acquisition since May 22, it's unlikely to attempt doing so until this appeal has run its course. Should the complaint fail, the company will be left to decide whether to pull its cloud gaming services from the UK or abandon the acquisition altogether.
Source: CAT (PDF)