Microsoft Offers the CMA New Evidence, Not New Compromises (Premium)

Microsoft provided the UK CMA with a list of "material changes" that have occurred since the agency ruled against the Activision Blizzard acquisition. And while many were expecting additional compromises from the software giant, that's not what happened. Instead, Microsoft argues that additional evidence unearthed since the original CMA decision, mostly during its hearings with the U.S. Federal Trade Commission (FTC), completely undermines the CMA's position. Ergo, a new decision is warranted.

One has to think the software giant is tired of the charade. It is notable that the only two regulatory bodies that blocked Microsoft's acquisition of Activision Blizzard both had non-sensical rationales for doing so. And while we might argue that regulators from both agencies, the U.S. Federal Trade Commission (FTC) and CMA, were equally delusional in believing that their illogical arguments against the merger would withstand any scrutiny, the CMA's is particularly fanciful. It posits an imaginary future in which cloud-streamed gaming somehow becomes a major market unto itself. And in the context of this fever dream that Microsoft, an also-ran in the video game market today, might somehow commit future crimes like those in the book and movie Minority Report as part of a dastardly plot to dominate a business in which it has never been successful or profitable.

We all love come-from-behind stories. But as regulators from the European Union (EU) acknowledged, and as a simple reading of the facts reveals to any interested party, Microsoft has been nothing but upfront about its desire to do with Xbox what it did previously with Microsoft 365 and meet its customers where they are. And in this case, that means---explicitly---keeping (or bringing) Call of Duty and other key Activision Blizzard titles on its competitor's consoles and bringing games from its subscription and cloud streaming offerings to its competitors in those markets as well. The lengthy cascade of partnership deals it orchestrated in the wake of its acquisition announcement stands as the factual reality in the face of the CMA's invented fantasy. It's one thing to say you'll do something, but Microsoft has put action to words.

Anyway. Here we are. The CMA, after a comical series of backtracking and face-saving, is taking the rare if not unprecedented step of reevaluating its "final" decision, engaging in what we might call "regulatory theater" by pretending to do its job by belatedly considering concessions it should have entertained before saying no to Microsoft, concessions that Microsoft said it would make almost one year ago, in September 2022. The resulting fake hustle requires the CMA to seek public feedback on the deal---feedback it received and ignored last year when gamers, PS5 owners, and UK-based game streaming services all told the agency that they approved of this deal---over a period of just a few days, and to save face by pretending to wrangle additional concessions ...