On rereading the summary of their final report, it looks I was the one who was mistaken. You both are correct in saying that the "essential input" argument has been maintained.
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Microsoft/Activision Blizzard Thread | [NEW] China Approves Unconditionally
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This isn’t their argument, their arguement is that MS already owns a big chunk of the market share. If MS were first in the console market in the U.K. it also would have been blocked for that reason.
It feels so good to read something reasonable. This right there is exactly why the CMA is wrong: The cloud-market that they hypothesize about doesn't exist right now. Allowing the deal would actually mark the beginning of such market. And in combination with the European Commission's remedy demands, it would, as stated, allow many cloud companies to push their own business, not just Microsoft's.
Now we have a direct comparison between a reasonable and an unreasonable regulator. The former analyzed the market and came to certain conclusions. The latter formed its conclusions first and then did a lot of mental gymnastics to justify those conclusions.
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It's sensible too, odds are MS's remedies will grow the cloud market at an accelerated rate then it otherwise would. This would likely lift all boats, making cloud profitable/viable a lot sooner. Does that mean MS may end up with a slight advantage? Sure, but we have dozens of examples in markets where early advantage is completely blown away by smart competitors who compete on product/price/marketing/etc. Even just in a gaming vacuum, if Sony and Nintendo put serious effort into cloud gaming they'd likely eat Microsoft's lunch.
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Funny to see EU doing what CMA envisioned itself doing.
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The thing is that UK by itself is not really that big market anymore. And ABK deal is big enough to have influence on dealing with UK market at all. Especially with a worldwide support.
I think it comes down to CAT's decisions. CMA's case is so flimsy they could very well get backed into a corner depending on CAT's instructions and this is really the perfect M&A test case to place some sensical guardrails.
There is political influence and CMAs been on the defensive literally hours from the EC decision. People have blasted the MS/ABK PR bluster but frankly it's working to some extent, the mindset and mood has definitely shifted in their favor on this. Helps that nearly the entire games industry and every other regulator already agrees with them though.
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It does not help too if you get news like this
Monzo founder quits ‘unfavourable’ London for San Francisco
Banking app founder latest to quit UK as fears grow over tech exodus from the City
www.telegraph.co.uk
CMA is under tremendous pressure with UK, other countries and even CAT telling them to do proper work. Even FTC is silent. And EU is dunking on them hard.
I think eventually CMA will start using behaviour remedies.
Yeah, there's incredible pre-existing economic pressure on the UK generally and in tech investment specifically. The MS/ABK stuff feeds into a narrative that's already there.It does not help too if you get news like this
Monzo founder quits ‘unfavourable’ London for San Francisco
Banking app founder latest to quit UK as fears grow over tech exodus from the City
CMA is not being tough by not accepting remediations. They are being lazy. Their statements are clear but people keep muddying it.
CMA doesn't see the point in having to create regulatory oversight in a business where it's not currently required just to allow two businesses to merge.
People need to stop thinking EU or US findings will influence any appeal. CMA can rightly just say it's interested in the UK market and not what other regulators are up to.
If you think there needs to be greater coordination then that will need a global effort, loss of sovereignty and a WTO type organisation managing multinationals rather than states.
CMA doesn't see the point in having to create regulatory oversight in a business where it's not currently required just to allow two businesses to merge.
People need to stop thinking EU or US findings will influence any appeal. CMA can rightly just say it's interested in the UK market and not what other regulators are up to.
If you think there needs to be greater coordination then that will need a global effort, loss of sovereignty and a WTO type organisation managing multinationals rather than states.
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Nout to do with CMA. Monzo is a successful British tech company. This guy managed to start it. What the UK does not do is throw stupid money at clear grifts and unproven new ideas.It does not help too if you get news like this
Monzo founder quits ‘unfavourable’ London for San Francisco
Banking app founder latest to quit UK as fears grow over tech exodus from the City
CMA is under tremendous pressure with UK, other countries and even CAT telling them to do proper work. Even FTC is silent. And EU is dunking on them hard.
I think eventually CMA will start using behaviour remedies.
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Nout to do with CMA. Monzo is a successful British tech company. This guy managed to start it. What the UK does not do is throw stupid money at clear grifts and unproven new ideas.It does not help too if you get news like this
Monzo founder quits ‘unfavourable’ London for San Francisco
Banking app founder latest to quit UK as fears grow over tech exodus from the City
CMA is under tremendous pressure with UK, other countries and even CAT telling them to do proper work. Even FTC is silent. And EU is dunking on them hard.
I think eventually CMA will start using behaviour remedies.
This isn't the pristine defense that you seem to think it is. If the CMA's reasoning to never accept behavioural remedies is "we don't want to enforce regulations" then they are explicitly avoiding the job of a regulator. This is not the kind of institution that a government or populace should want protecting them.
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Microsoft and ABK should just finalize over the CMA block anyways, sounds like it'd be too much effort for the CMA to actually enforce that block
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I wanted to add that the EC specifically commented on how easy and simple it is to oversee the remedies. And that accepting them is good for the overall market.
I'm not defending the CMA, I am simply reiterating their statements and decision for context. Again the issue here is not a global agreement on how this should be done. CMA is perfectly capable of saying the merger would not benefit the industry and just create more beurocracy over how the market works. Its not like either party is a failing company, they will both survive and continue.
Uh, no? No they are not perfectly capable. You seem to think that the CMA's words are absolute and nothing can be done about it. Do you really expect no one will challenge their decisions ever? That the CMA will never make a mistake in their judgment? That they will never purposefully make a "bad" choice for ulterior motives? Nobody has to take CMA's verdict and roll over and die, that's not how this shit is gonna go. Just making an appeal to authority and walking away isn't going to cut it as an argument, much like how CMA's argument against this merger.
While we can't ever claim to know with certainty what they "really" believe, I think that it's not a policy you set without knowing what the implications are. The people steering these changes are certainly intelligent and well educated. The implications are firstly that you will have more mergers killed during review, and secondly that you will have fewer mergers attempted if people believe it might come under close review. In that light, I do think it's them "being tough". I believe there's enough context surrounding the organisation to say that they have been signalling a desire to be tougher and this is one of the main ways they're doing it.
I think the idea of ongoing monitoring being a significant barrier is mostly a post hoc justification. Wealthy companies making large mergers can and have offered to pay for the costs of monitoring, so they could afford to have watchdogs just on the payroll for the purpose of enforcement if they wanted to allow it. There are also other approaches you can take if you really want to find a way to make them less burdensome to enforce, like inviting competitors and the public to act as whistleblowers on violations or suspected violations. They don't appear to want to find such ways to make it work, they want to simply not do it. I don't think they have a religious prohibition against it, I think it's that they like what the implications of disallowing it are.
You might have some situations where monitoring is genuinely difficult, but there are others where it's obviously not hard to monitor. Like in this case, where Microsoft not putting a game on Playstation is something that is absolutely impossible to hide. Or Microsoft sending a C&D to Boosteroid demanding CoD be removed from their platform can be flagged at the CMA within minutes of it happening and fines or penalties can be levied in response until compliance is restored. Since monitoring is not hard (outside of looney tunes scenarios where it's Secret Bugs On Level 12 Only For People Gaming On PS Now Cloud Streaming), the incentives to not break the agreements are very powerful.
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Is it time for Satya Nadella to walk away from the $69B Activision Blizzard deal?
Microsoft's plan to acquire the video game publisher deal is under attack by regulators, and looking like it will be a long slog. But there's a very good reason for Microsoft to fight for it.
Also
Microsoft's CAT appeal (summary) is up!
In summary, the Applicant challenges these decisions on the following grounds:
1) Ground 1: The Respondent made fundamental errors in its assessment of the Applicant’s current position in cloud gaming services by failing to take account of constraints from native gaming (whereby gamers access games installed on their devices through a digital download or physical disc), undermining its SLC finding:
a) In its market definition analysis, the Respondent failed to consider potential switching to native gaming, resulting in a flawed conclusion that cloud gaming services fall in a separate product market.
b) Even on the Respondent’s erroneous, narrow, market definition, the Respondent failed to take into account relevant out-of-market constraints from native gaming in its competitive assessment of vertical foreclosure effects.
c) The Respondent made fundamental errors in its calculation and assessment of market share data for cloud gaming services and as a result failed to take into account relevant considerations in its competitive assessment.
2) Ground 2: The Respondent erred in failing to take proper account of three long-term commercial agreements which the Applicant had entered into with cloud gaming providers for the licensing of rights to stream its games, including Activision’s gaming content, post-Merger (the “Agreements”) in its assessment.
3) Ground 3: The Respondent’s finding that Activision would have been likely to make its gaming content available on cloud gaming services absent the Merger was irrational and arrived at in a procedurally unfair manner.
4) Ground 4: The Respondent’s findings that the Applicant would have the ability and incentive to foreclose rival cloud gaming services by withholding access to Activision’s gaming content post-Merger was unlawful. In particular, the Respondent’s analysis was affected by four errors, each of which in isolation, separately, and/or cumulatively, renders the findings on ability and incentive unlawful, irrational and/or disproportionate.
a) The Respondent wrongly relied on evidence that so-called ‘AAA’ games would be important for cloud gaming services to find that Activision games in particular would hold such importance.
b) The Respondent failed to take account of relevant evidence regarding immediate losses from hypothetical foreclosure, which showed that the Applicant would not have an incentive to withhold access to Activision games from cloud gaming rivals.
c) As set out in Ground 1 and Ground 2, the Respondent wrongly failed to take account of (i) relevant out-of-market constraints and (ii) the Agreements.
5) Ground 5: In assessing remedial action for the SLC, the Respondent:
a) Erred in law by proceeding on the basis that it had a duty to impose what it described as a comprehensive remedy, thus failing to consider a range of remedies and assess their benefits and detriments in the round;
b) Unlawfully failed to take account of the interests of comity;
c) Erred in rejecting the Microsoft Cloud Remedy, which rejection was in all the circumstances disproportionate; and
d) Acted in breach of the Respondent’s common law duty of fairness and the CMA’s own remedies guidance.
The Applicant seeks the following relief from the Tribunal:
1. An order pursuant to section 120(5)(a) of the Act quashing the Decision in its entirety;
2. An order that the Respondent pays the Applicant’s costs of this Application;
3. Such further or other relief as the Tribunal deems fit.
In summary, the Applicant challenges these decisions on the following grounds:
1) Ground 1: The Respondent made fundamental errors in its assessment of the Applicant’s current position in cloud gaming services by failing to take account of constraints from native gaming (whereby gamers access games installed on their devices through a digital download or physical disc), undermining its SLC finding:
a) In its market definition analysis, the Respondent failed to consider potential switching to native gaming, resulting in a flawed conclusion that cloud gaming services fall in a separate product market.
b) Even on the Respondent’s erroneous, narrow, market definition, the Respondent failed to take into account relevant out-of-market constraints from native gaming in its competitive assessment of vertical foreclosure effects.
c) The Respondent made fundamental errors in its calculation and assessment of market share data for cloud gaming services and as a result failed to take into account relevant considerations in its competitive assessment.
2) Ground 2: The Respondent erred in failing to take proper account of three long-term commercial agreements which the Applicant had entered into with cloud gaming providers for the licensing of rights to stream its games, including Activision’s gaming content, post-Merger (the “Agreements”) in its assessment.
3) Ground 3: The Respondent’s finding that Activision would have been likely to make its gaming content available on cloud gaming services absent the Merger was irrational and arrived at in a procedurally unfair manner.
4) Ground 4: The Respondent’s findings that the Applicant would have the ability and incentive to foreclose rival cloud gaming services by withholding access to Activision’s gaming content post-Merger was unlawful. In particular, the Respondent’s analysis was affected by four errors, each of which in isolation, separately, and/or cumulatively, renders the findings on ability and incentive unlawful, irrational and/or disproportionate.
a) The Respondent wrongly relied on evidence that so-called ‘AAA’ games would be important for cloud gaming services to find that Activision games in particular would hold such importance.
b) The Respondent failed to take account of relevant evidence regarding immediate losses from hypothetical foreclosure, which showed that the Applicant would not have an incentive to withhold access to Activision games from cloud gaming rivals.
c) As set out in Ground 1 and Ground 2, the Respondent wrongly failed to take account of (i) relevant out-of-market constraints and (ii) the Agreements.
5) Ground 5: In assessing remedial action for the SLC, the Respondent:
a) Erred in law by proceeding on the basis that it had a duty to impose what it described as a comprehensive remedy, thus failing to consider a range of remedies and assess their benefits and detriments in the round;
b) Unlawfully failed to take account of the interests of comity;
c) Erred in rejecting the Microsoft Cloud Remedy, which rejection was in all the circumstances disproportionate; and
d) Acted in breach of the Respondent’s common law duty of fairness and the CMA’s own remedies guidance.
The Applicant seeks the following relief from the Tribunal:
1. An order pursuant to section 120(5)(a) of the Act quashing the Decision in its entirety;
2. An order that the Respondent pays the Applicant’s costs of this Application;
3. Such further or other relief as the Tribunal deems fit.
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The battle will be interesting.
Wow, isn't it interesting how MS's filing is point-for-point identical to the issues discussed in this very thread? What amazing coincidence!
Good looking out, InstallBase.
Good looking out, InstallBase.
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Well, you don't need to have a law degree to understand that CMA has come out with nonsense.
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So how likely is it that Microsoft wins the appeal?
It should be tough. Won't put an exact number on it because the overall power structure is a bit iffy, but in general CAT has let CMA run free and the avenues are pretty narrow. But this is a unique case given the circumstances. The console SLC being removed midway clearly gutted a lot of their overall arguments.
So we'll see, but this isn't close to being like the FTC where it would be an easy slam dunk in the US court system.
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The thing is indeed we are in a unique situation. CMA used to deal with small, cheap deals for quite a long time and other big deals that were stopped (like Nvidia/ARM) had a worldwide opposition so CMA's opinion was not that relevant either. That's not the case with ABK. This deal has support from most of the countries and companies at this point. And in ABK case their decision affected not only their own reputation but also UK's. Especially in a context of Brexit and EU vs UK politics. I still believe that CMA expected EC to block the deal to steal the thunder from EC acting like the "I was the first one to make a right decision".
Also in theory if CAT squashes CMA's decision they will win the power game between CMA and CAT - as CAT will gain worldwide reputation due to "reasonable decision", while CMA (already has done) will lose theirs and become a joke akin FTC. Too much politics in play.
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Very interesting thread (40 parts)
Also, Florian wrote an article about Judge Marcus Smith some weeks ago (as Judge Smith has patent expertise).
www.fosspatents.com
Also, Florian wrote an article about Judge Marcus Smith some weeks ago (as Judge Smith has patent expertise).
Antitrust & patent judge Mr. Justice Marcus Smith will hear Microsoft's appeal of UK CMA's irrational decision to block Activision Blizzard purchase: Apple, Optis waiting for his FRAND ruling
Chances are you've heard of Mr. Justice Marcus Smith --at minimum, of some of his decisions--whether you read FOSS Patents primarily for its...
Honestly I get their going to fight for everything but some of those arguments from MS are incredibly weak.
Feel free to point out the weak arguments and why you think they're weak.
3 - I think its ridiculous to suggest Activision in the next 10 years would not be offering some kind of cloud service or participate in cloud services.
4) Its totally ridiculous to suggest that AAA would not have a significant role in cloud services; half the point is being able to run these types of games. MS better have data to back this up. I can't see how they will.
1 is their strongest argument and takes into account the views of other regulatory bodies. I think 2 fails against the fact its a young 'new market' (if ground 1 fails) and so deals with existing companies is not really ground breaking.
If they can't win on 1 I can't see them win on the rest.
3 - Cloud Gaming has been a thing for a while, and Activision didn't offer their games on cloud for OnLive (2003), PS Now (2014), Xbox Cloud Gaming (2019) or GeForce Now (2020). They've had 20 years to offer their games via cloud and they haven't done it.
In fact, the only thing Activision has done in all this time in regards to cloud gaming is actively take their games off GeForce Now. The CMA has to prove why they think Activision is going to change their minds, and they haven't done it. They simply "assume" so, even when past behavior from Activision doesn't make it sound like Activision was going to offer their games on cloud in the future at all.
4 - In regards to what I think is your point here (Ground 4A), Microsoft says that the CMA is wrongly using some data to say that Activision games in particular would be very popular on cloud when that doesn't take into account that - for instance - COD multiplayer is basically unplayable on cloud.
Any cloud player would get destroyed because of latency alone considering how low the TTK is in COD. We've seen that Fortnite on Xbox Cloud Gaming flopped while other, less popular games, did much better on it. Multiplayer shooters - which are a big part of Activision's catalog - are mostly unplayable on cloud, and thus it's wrong to assume they'd be as popular on cloud as they are on native systems (which is what the CMA did).
MS is specifically claiming about AAA games, and clearly technology is improving in this area.
They haven’t so far, have shown no want to do so, and EU also found this.
The point of that is that activision games being an essential input for cloud. CMA jumped from the general group of AAA being important straight to COD being extremely important for cloud games with no evidence for the latter because Activision has resisted cloud gaming.
Microsoft says the CMA wrongly used some data about the popularity of AAA games in general to say that Activision games in particular are going to be as popular on cloud as they are on native systems. Microsoft is not saying that AAA games in general are not going to be important on cloud.
And yeah, tech might be improving, but there is always going to be some latency, making multiplayer shooters unplayable on cloud. You simply cannot be competitive even if you are only 1 second behind your enemy when the TTK is 0.4 seconds.
You can visit xbox.com/play right now and try to play Fortnite, Halo Infinite or Sea of Thieves against other players, you'll see you're gonna be useless even if you are a skilled player.
Is CMA that mixer things up between AAA offer and COD offer
COD isnt the only nor the most important AAA product among the future cloud gaming ecosystem
Hell, from what has happene until now Nd all.the offering deals MS is throwing away as "remedies", the COD specific offer within the Cloud gaming ecosystem would INCREASE even, compared to nowadays situation
Evidence so far suggests that Activision is not interested in putting their games on cloud. According to the CMA's logic, Activision games are essential for cloud, so cloud shouldn't be able to grow much in the next 10 years, right?
That's not what Microsoft suggested. The CMA suggested that since AAA games in general seem to be important for cloud, Activision games and specifically CoD must be important for cloud too. Notice how CoD has never been on any big cloud service so far so it's impossible to assess the importance of CoD for cloud.
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thank for Eroke from resetera for the notice
South Korea's Fair Trade Commission approves MS's acquisition of ABK
First, the combined share* of games developed and distributed by Microsoft and Blizzard is small, and unlike overseas, major Blizzard games are not popular, and there are many popular game developers that competitors can trade alternatively, so it is not enough to exclude competitive game services.
Share of domestic console games (by distribution): 2-4%, domestic cloud game (distribution) share: 4-6% (21 years)
Second, even in the event of a blockade, the effect of converting competitors' consumers to subscribers of its services would be minimal due to the lack of popularity of Blizzard's games, and competitors have a significant market share*, so there is no risk of exclusion from competition.
* Competitors' market share: domestic console games (Sony 70~80%), domestic cloud games (Nvidia 30~40%).
South Korea's Fair Trade Commission approves MS's acquisition of ABK
First, the combined share* of games developed and distributed by Microsoft and Blizzard is small, and unlike overseas, major Blizzard games are not popular, and there are many popular game developers that competitors can trade alternatively, so it is not enough to exclude competitive game services.
Share of domestic console games (by distribution): 2-4%, domestic cloud game (distribution) share: 4-6% (21 years)
Second, even in the event of a blockade, the effect of converting competitors' consumers to subscribers of its services would be minimal due to the lack of popularity of Blizzard's games, and competitors have a significant market share*, so there is no risk of exclusion from competition.
* Competitors' market share: domestic console games (Sony 70~80%), domestic cloud games (Nvidia 30~40%).
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So we can probably thank Sony for agreeing with "high performance home console market" definition as Korean FTC used exactly that. Also with those % we can roughly estimate number of Xbox consoles sold.
CMA really made a political blunder. Considering that UK does not have trade agreements yet, CMA's behaviour will certainly be included in those trade talks.
CMA really made a political blunder. Considering that UK does not have trade agreements yet, CMA's behaviour will certainly be included in those trade talks.
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Something that caught my eye in the KFTC decision (via MLEX/Idas):
This seems almost impossible to reconcile with 2021 physical software figures (89% Nintendo, 11% PlayStation, 0% Xbox) or really even the hardware figures (82% Nintendo, 18% PlayStation, 0% Xbox) and also not reflective of weekly Mediacreate charts? I couldn't find any reference to where KFTC sourced their figures either, perhaps a native speaker could find something?
That sure looks like a mistake(someone mixing up the Nintendo and Sony labels?) but then again, maybe the Korean PS scene really is the F2P wonderland that people try and say Japan is. Could also be that they're working with very incomplete data, odds are they don't have any Digital data from Nintendo but do from Sony, which would skew things a bit though not enough for that result.
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Either Idas or MLex made a keyboard oopsie? Seems pretty likely, given the differences in the figures on physical media sales from MC.
EDIT: Only other way I see that making sense is is they're adding sales across the entire industry lifetime up to 2021, since Sony has been an official presence in Korea for at least 5-10 years longer than Nintendo has.
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I think even if it were revenue based (not specified as far as I can tell?) huge F2P probably isn't enough to get at those figures given the known Switch+3DS hardware advantage over PS4+5. Even if PS led revenue, the Nintendo figure is really just too unreasonably small?
I'm sort of leaning towards the "mixed data" theory but more insight on that could help (native speakers help!).
I used Google Translate but the KFTC decision says the same figures too.
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Unless KFTC mixed it up? (lol)
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Sorry, see the edit above, took a chair nap before I posted the edit. Even if they added the Hyundai Comboy releases to the Nintendo total, Sony would have a significant advantage against Nintendo if they're doing industry-lifetime marketshare and could explain the figure?
But yeah, maybe it's a KFTC oopsie instead, I dunno.
That could be possible if it was vendor lifetime but it says expressly for 2021? That's why I brought it up, we have full MC data for 2021 and KFTC's marketshares are basically impossible given that.
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china official document if someone wants to translate