Microsoft Fights UK Rejection of Activision Blizzard Acquisition

Microsoft has lodged an official appeal against the UK Competition and Markets Authority's decision to block its proposed acquisition of Activision Blizzard, which also includes King, the mobile gaming giant. The company filed a reexamination request approximately one month after the CMA rejected the $69 billion deal. The authority's reasoning for rejecting the acquisition was based on a desire to safeguard competition in the cloud gaming industry. According to the CMA's initial findings, Microsoft's purchase of the Call of Duty maker would grant the tech giant too much power in this burgeoning market. Instead of regulating the company's cloud gaming business after the acquisition, the CMA determined that preventing the deal was the most straightforward solution. The decision has divided the public and London officials, with even the UK Chancellor expressing dissatisfaction with the block on Microsoft's Activision Blizzard acquisition.

Microsoft officially appealed the CMA's ruling on May 24, after confirming its intentions to do so in late April. The appeal was filed with the Competition Appeal Tribunal (CAT), a specialist judicial body with multidisciplinary oversight. In their application, Microsoft's attorneys listed five grounds for appeal, starting with a claim that the CMA had made multiple factual errors in assessing the company's cloud gaming business in terms of content and market share.

The appeal argues that Microsoft's proposed remedies, such as partnering with cloud gaming platforms like Nvidia GeForce Now, Boosteroid, and Ubitus for a decade, were not given proper consideration by the regulator. The third point of contention is the CMA's assessment that Activision Blizzard will likely bring its titles to cloud gaming platforms independently, which Microsoft's lawyers deemed "irrational." The appeal also dismisses the idea that withholding Activision Blizzard's game catalog from Xbox Cloud Gaming rivals would incentivize future growth in the cloud gaming industry, downplaying the importance of AAA games. 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 goes against the regulator's own guidance on such matters. A case management meeting on the petition, which may provide a clearer timeline for the appeal, has been scheduled for May 30.

If the complaint is successful, the CAT will ask the CMA to revisit the proposal, taking into consideration any accepted grounds for appeal. Microsoft cannot proceed with the Activision Blizzard acquisition until the appeal process has been completed. However, if the complaint is unsuccessful, Microsoft will have to decide whether to withdraw its cloud gaming services from the UK or abandon the acquisition altogether.