Microsoft Appeals CMA Veto Of Activision Blizzard Acquisition

Microsoft has filed its expected appeal against the ruling by the British competition watchdog, the Competition and Markets Authority (CMA).

Xbox maker Microsoft is appealing after the CMA last month officially blocked Microsoft’s $68.7 billion (£54.8bn) acquisition of gaming studio Activision Blizzard, due to concerns it could damage the emerging cloud gaming market.

This prompted an angry war of words between Microsoft and the British regulator, which recently defended its decision in the UK parliament.

Cloud gaming

The CMA pointed out at the time that the deal is also facing obstacles in the US, where the Federal Trade Commission is suing to block it.

The US FTC trial has been set for early August this year.

Microsoft argued that the CMA’s decision was a sign that the UK was “clearly closed for business”, and added the CMA’s move “discourages technology innovation and investment” in the UK.

But the CMA doubled down on its decision this month, when it further restricted Microsoft and Activision Blizzard from “acquiring an interest” in one another, in a further effort to halt the deal.

Recently however, the European Commission approved the acquisition, saying Microsoft’s proposed remedies had allayed its competition concerns.

EU regulators had obtained concessions from Microsoft, saying it would open Activision’s game library to rival gaming platforms such as those made by competitor Sony for a 10-year period.

The concessions essentially involves Microsoft offering free licences over a 10-year period, allowing European consumers who purchase Activision PC and console games to stream them on other cloud gaming services.

Microsoft said at the time of the CMA ruling that it would appeal, and now according to various media outlets, Microsoft has formally lodged an appeal against the CMA verdict.

Microsoft did not respond to Silicon UK at the time of writing.

Microsoft’s appeal will be argued before the Competition Appeal Tribunal (CAT) in London.

Robust appeal

Gareth Mills, Partner at law firm Charles Russell Speechlys, said that Microsoft’s appeal was heralded almost immediately after the decision had been announced, and so this news of the appeal comes as no great surprise.

“The rhetoric accompanying this announcement however shows that Microsoft is taking an extremely robust approach to the appeal and are willing to use their considerable resources to test the CMA’s resolve to stand behind their previous decision,” said Mills.

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“The EU’s approval of the Activision acquisition (albeit with conditions attached) may give both parties an opportunity to find a third way, although such would represent a considerable change in tone and attitude from those currently being expressed,” said Mills.

In order for the deal to go through, it is understood Microsoft and Activision need approval from regulatory bodies in the UK, EU and the US.

Gamer lawsuit

Microsoft has achieved some legal success of late concerning the Activision takeover.

For example in December Microsoft was hit with the lawsuit in the US from ten video game players in California, New Mexico and New Jersey.

These gamers were concerned that the availability of highly popular titles such as Call of Duty would become limited following the Activision Blizzard planned merger.

In March however a US judge dismissed the private lawsuit brought by the video gamers, with the San Francisco federal court saying the gamers had not shown they would be “irreparably harmed” if the Microsoft-Activision Blizzard merger were allowed to proceed.

Joseph Saveri, a lawyer for the plaintiffs, told Reuters in March that they planned to submit an amended lawsuit “with additional factual detail” to “address all of the ways in which the judge indicated we need to allege more.”