Microsoft sets out grounds for Activision’s appeal against UK regulator

Microsoft is challenging Britain’s decision to block its $69 billion acquisition of “Call of Duty” maker Activision Blizzard over “fundamental errors” in its assessment of Microsoft’s cloud gaming services. Britain’s antitrust watchdog, the Competition and Markets Authority (CMA), vetoed the deal in April, saying it could harm competition in the fledgling cloud gaming market, sparking a furious dispute.

Microsoft confirmed on Wednesday that it had lodged an appeal against the ruling with Britain’s Competition Appeal Tribunal (CAT), and a summary of its arguments was published on Friday. It said the CMA’s conclusion that the deal would lead to a substantial decrease in competition in the UK cloud gaming market was incorrect, according to the summary.

The CMA “made fundamental errors in its calculation and evaluation of market share data for cloud gaming services by failing to take into account the limitations of native games (by which players access games installed on their devices through a digital download or a physical disc)”, Microsoft say in the Court of Appeal of Competition. Setting out five grounds of appeal in total, he also said he would challenge the CMA’s understanding of the cloud gaming market and the impact of the deal.

Rima Alaily, corporate vice president and deputy general counsel at Microsoft, said the CMA’s decision was “wrong for multiple reasons, including its overestimation of the role of cloud streaming in and our position in the gaming market, as well as such as their unwillingness to consider solutions, which received overwhelming support from the industry and the public.” “We are confident in the strength of our appeal and the binding commitments we have made to increase competition and choice for players today and in the future.”

Appeals against CMA decisions are heard by the Competition Appeals Tribunal, which issues a judgment on the merits of the decision, and is not an opportunity for Microsoft to file new appeals. EU competition authorities approved the deal earlier this month after accepting remedies brought by Microsoft that were broadly comparable to those it proposed in the UK.

Microsoft also appealed action by the US Federal Trade Commission seeking to block the deal on the grounds that it would stifle competition, the agency says. The CMA reiterated its position on Friday, with a spokesperson saying: “We banned this deal because we were concerned it would reduce innovation and choice in the UK cloud gaming market. We will defend our position in court.”

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