Microsoft lays out appeal against CMA’s Activision Blizzard acquisition block

Just as it said it would, Microsoft has appealed the CMA’s decision to block its acquisition of Activision Blizzard, and its summary of arguments is now available for scrutiny.

In April, after months of deliberation, the UK’s Competition and Market Authority made the shock decision to block Microsoft proposed $69b acquisition of the Call of Duty maker, highlighting concerns relating to the burgeoning cloud gaming sector and arguing the deal would risk “stifling competition in this growing market”.

It’s a position that was welcomed by some and by rejected by others. The EU, which approved the deal in May after Microsoft agreed to concessions, has been critical of the CMA’s stance, and a number of UK politicians, including chancellor Jeremy Hunt, have also raised concerns. Microsoft, of course, has also criticised the decision, confirming it would launch an appeal.

That appeal will require Microsoft to present its case to the the UK’s Competition Appeal Tribunal, which it has now done, and a summary of its arguments is now available for perusal. These outline five key grounds on which Microsoft challenges the decision, starting with its claim the CMA made “fundamental errors in its assessment of [Microsoft’s] current position in cloud gaming services by failing to take account of constraints from native gaming” (that is, where consumers play a game on their device via a digital download or disc).

It also claims the CMA “erred in failing to take proper account of three long-term commercial agreements [Microsoft] entered into with cloud gaming providers”, calls the CMA’s conclusion that Activision would have made its games available on cloud gaming services without the merger both “irrational and arrived at in a procedurally unfair manner”, and argues the CMA’s findings Microsoft “would have the ability and incentive to foreclose rival cloud gaming services by withholding access to Activision’s gaming content” after the acquisition “unlawful”.

Finally, Microsoft insists the CMA “erred in law by proceeding on the basis that it had a duty to impose what it described as a comprehensive remedy”, “unlawfully failed to take account of the interests of comity”, “erred in rejecting the Microsoft Cloud Remedy, and “acted in breach of [Microsoft’s] common law duty of fairness and the CMA’s own remedies guidance.”

Appealing the CMA’s decision will likely be a lengthy process for Microsoft and Activision; the UK’s Competition Appeal Tribunal says it aims to deal with straightforward cases within nine months, and, if the appeal is successful, it will still need to go back though the CMA for review.