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In what way? Just not do business in the UK? It's a top 5 gaming market, probably top 3 for console gaming.
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News The UK regulator CMA has blocked Microsoft’s proposed acquisition of Activision Blizzard to protect innovation and choice in cloud gaming
- Thread starter mazi
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I am sure UK needs Windows more than Microsoft needs the UK. If the deal passes in the US it should be able in the UK eventually.
MS isn't about to lose one of their most profitable overall markets just to get ABK. That's putting the cart before the horse.
I don't think they'd lose it, I think the UK would fold first if they went through with the deal anyway.
A megacorp essentially trying to bully their way into getting what they want is not going to go over well for them.
In this case I disagree. Companies do it all the time.
Well in this specific case you're wrong. It doesn't make sense for MS to pull out of UK market just to get ABK. They stand to lose more than they can gain.
I agree. Instead I'm sure they'll find a way to bully UK into allowing it. This deal is too big to be stopped by the UK alone.
Ozeiyo
Paratroopa
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Amazing news. Except for Microsoft, I guess. I am assuming the deal will end up going through, but this is a step in the right direction. At least until we manage to create clear legislative frameworks that prevent industry consolidation and/or abolish capitalism, since competition transforming into cartels is a feature of the system and not a bug.
This is not historically accurate. Companies bully governments into getting what they want all the time.
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EDIT: Putting what I originally wrote in spoiler tags as it was uncalled for.
Supporting an acquisition of this scale just because it would (likely) get rid of a rotten CEO feels like cheering on US imperialism for removing a dictator
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boodream
Paratroopa
This position seems to me very, very ethnocentric.
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Holy crap dude, you can not be serious.
Fair point.
At least going by precedent, MS' appeal isn't gonna do anything.
Ooookay but the point is that by legal procedure, this deal is as good as blocked. Can MS get up to not-so-legal stuff to force the deal through? Sure, I guess.
Galgavias
Koopa
One thing I do wonder is whether Phil Spencer is sitting comfortably right now. The financials for Xbox weren't exactly peachy yesterday and console sales for them seem sluggish while PS5 sales are beginning to rocket (and Switch remaining relatively strong too). I think they were really riding on deals like this to generate hype for the console and drive success, especially given that Microsoft are still struggling to get their own big selling exclusives out the door. Now they've spent a huge amount of time and resources on a deal which looks like it's close to being DOA. Higher ups are probably going to ask if that $70Bn allocated could have been spent better elsewhere... and I'm not just talking about within Microsoft's gaming division.
boodream
Paratroopa
Without going to extreme and unjustified comparisons, it is difficult not to think that certain reactions would have been very different depending on the nationality of the company concerned.
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The aftermath to this decision will take quite some time I assume.. interesting to see how it all ends, maybe next year
Also: Will Jez Corden survive this?
Also: Will Jez Corden survive this?
The CMA's reasoning is iffy, but giving a regulatory agency flak for not being beholden to pro-business interests and day to day politics also is.
I'm gonna have to learn more about how Microsoft could let a lack of concessions about a theoretical market monopoly get in the way of their $70 billion acquisition when they were willing to offer up all necessary concessions regarding the currently existing market (unless the market monopoly isn't all that theoretical in their minds, either).
I'm gonna have to learn more about how Microsoft could let a lack of concessions about a theoretical market monopoly get in the way of their $70 billion acquisition when they were willing to offer up all necessary concessions regarding the currently existing market (unless the market monopoly isn't all that theoretical in their minds, either).
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Okay yeah, that was an extreme analogy, I apologize.
My point was that corporate acquisitions tend to be bad for both workers and consumers, and removing Kotick (as an unintended consequence no less) is not enough justification
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It seems a bit premature to already be dancing of the grave of this deal when Microsoft already said they are going to appeal. This decision didn’t suddenly kill the deal, there’s still a long way to go.
Ozeiyo
Paratroopa
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You make a really good point.
Xbox (the division) has been unable to build hype for the console because -hindsight is 20/20, I guess- it has been working on growing the brand by making GamePass the focus, by putting everything on PC, and by focusing on big acquisitions that will (?) pay off in a few years instead of growing its relations with third parties organically and building its own studios. With the deal off and with COD not being on GamePass in the future, things are looking grim.
Starfield is not going to be the Skyrim that MS wants, and the Bethesda acquisition has been hit or miss. Good games (Hi-Fi Rush, Deathloop) that are niche and cannot break the sales MS would need -not to mention that two of the flagship Bethesda games have been on PS5 first-.
All of this sucks, because in spite of my grievances with the company and the fear that it can become a monopoly, I think the Xbox is a worthwhile product and without it out of the game (which is a real possibility) we're going to see the worst of Sony as a market leader. I miss the 360 times.
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Xbox is a relatively small, low-profit segment of Microsoft's business that's suffered repeated setbacks. That 70 billion isn't Phil Spencer's money -- it was earmarked for the ABK acquisition and now will likely be moved to something with better expectated returns elsewhere in MS's portfolio.
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I imagine the EU's final decision will determine if MS goes all in pursuing an appeal or bails. If the EU approves with the BR Microsoft proposed for Cloud, it likely bolsters their argument on appeal to CAT that the CMA is making an irrational argument about Cloud gaming.
Ahmed
Paratroopa
This is my fear. I selfishly don't care about 99% of Activision Blizzard games. But if the deal won't go through, MS is going to take their $70 billion and spend it on other studios/publishers. And there is the potential they will target those that I care about or would be hurt by it.
. Microsoft already have so many studios, need to use to the fullest what you already have
Galgavias
Koopa
Looking at it further and seeing reaction from elsewhere, it does seem that this move has ramifcations way beyond gaming and into Microsoft's core business. Like, every time they want to make another acqusition or merger for whatever, the regulators could instantly retort with a 'but the cloud tho, blocked.' If that's the case, they really have no choice but to keep fighting this. Their business depends on it.
And beyond even that, we now have regulators basing decisions on what 'may happen' down the line. That's going to have have an impact on investing in all technologies. Like, why would the likes of Google or Apple or whoever start significantly investing in new disruptive technologies if a regulator is going to turn around and say, 'but because you're the ones doing this it's bad, becuase one day you may be the only player in town, and we can't take that chance.'
Seriously the ramifications of this decision are pretty huge.
And beyond even that, we now have regulators basing decisions on what 'may happen' down the line. That's going to have have an impact on investing in all technologies. Like, why would the likes of Google or Apple or whoever start significantly investing in new disruptive technologies if a regulator is going to turn around and say, 'but because you're the ones doing this it's bad, becuase one day you may be the only player in town, and we can't take that chance.'
Seriously the ramifications of this decision are pretty huge.
Hero of Hyrule
Frieren the Slayer
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I am sorry but no. I refuse to accept this. I can't believe this was allowed to happen. The governments of the world are literally preventing Xbox from having a fighting chance. And for what? Sony's brand loyalty is insane, people are literally so dedicated to their precious PlayStation memories that now, as grown men and women, they continue to act irrationally just out of lingering misplaced love and loyalty for Sony. Developers will go out of their way to kiss Sony's ring, while MS has to bend over backwards to get them to just put their games on Xbox. Publishers will take Sony's shitty marketing and exclusivity deals, while MS has to fight tooth and nail to get them to support Game Pass, which is the future of gaming. Governments look the other way while Sony continues to unfairly dominate the market for 30 years, and buy out major Xbox aligned developers like Bungie, but Microsoft tries to buy a publisher and everyone decides to finally do their regulatory job. As a long time gamer, this is just so depressing. I feel like the hobby I grew up with and loved is dead.
robertman2
Chain Chomp
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this reads like a copypasta
Hero of Hyrule
Frieren the Slayer
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I’m back to regretting getting a 360 in 2008. Wish I got a PS3 and became a PlayStation fan instead. Really dejected thinking that Xbox will essentially never be a close second, but will always be a distant third, and will never stop skipping small random games like Oxenfree or Trails or big games like Final Fantasy.
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There's definitely an argument for regulators needing to look towards the future for approving/denying mergers in nascent markets. The problem is the CMA's argument here isn't even a good justification of protecting a future market. Microsoft is one of the companies pushing to try and make cloud gaming more of a thing, to essentially punish them for trying to be innovative and grow a new market is wild. Heck the CMA said as part of their comment "Microsoft wants to grow into mobile with this deal but they can't beat Apple and Google so that's not even worth considering" which is wild.
Hailinel
Musou Mania!
Pretty much. If this deal ends up falling through, the Xbox division has to answer for their expenses versus what they've brought in terms of revenue and profit. The days of Uncle Phil seemingly having a blank check are likely done.
SeafoamGaming
Moblin
Hailinel
Musou Mania!
Also something I haven't seen brought up much. If the deal fails to close by July 18, Microsoft is on the hook to pay billions of dollars to Activision. They're not in a position where they're just going to walk away with $70 billion entirely unspent if this all falls apart.
Tentacle-tropes
Kremling
So? MS has already stated they will appeal & go to court with either/and the FTC/CMA. They are in this for the long haul. Considering neither regulator really has an argument this still isn’t an over & shut case.
That just a few months away
JazzPotatoes
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MS is also one on the reasons home computing took off, but that doesn't mean their strategy around Windows wasn't still anti competitive and monopolistic.
The issue facing cloud gaming is that it's a nascent industry with the same potential to change things up as music streaming and movie streaming did, and yet there are only a couple of big players pushing it as a platform, and one of them has just spectacularly bailed.
If MS purchase Activision and decide they really really don't want Amazon or Sony making any further progress, then they can decide to make every COD game exclusive to their cloud platform, make Diablo and WoW exclusive to their cloud platform, and drop the price of entry to something ridiculously cheap, and all of a sudden their competitors are trying to compete against something with a value proposition they can never match.
That's not a good thing if it means one company just ends up swallowing everything
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There are two problems with your argument. First, MS doesn't need to do this deal to do the same thing we see in the movie and music industry and sign a 5-10 year exclusive deals for the streaming rights for all of ABK's titles. Blocking this deal doesn't prevent MS from going that route, if anything it probably further incentivizes them to do so. Secondly, it also assumes that Sony/Amazon/Nintendo/etc would need ABK properties to succeed in the cloud gaming market, which was the same flawed argument they tried to make about console gaming. Ultimately the numbers showed in console gaming MS had no incentive to foreclose on Sony on CoD (the only title the CMA really cares about if we're being honest), and odds are if cloud was a more active market, the numbers would show the same there. The CMA would have no argument if cloud was a healthier/active market.
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There is almost no way this would close in time now. I can’t imagine an appeal will be heard and decided in less than 3 months.
Galgavias
Koopa
There's two issues here. One, there's no real evidence yet that Cloud Gaming is a couple of years away from experiencing the huge 'Eureka' moment where it suddenly explodes in popularity. It's been around for a while now, and yet it's still only a fraction of the current market. People have just got used to downloading a game/popping in a disc, sitting down on their sofa and grabbing the controller. Console sales remain very healthy and there's no sign people are ready to give them up yet (you can argue that the concept of buying a console has in itself becomes something of a prestige purchase, people want to buy one to show off). And if gamers are that desperate to play games on the go, they either buy a high end laptop, a top of the range smartphone, or they buy a Switch. The technology is there but the consumers aren't interested. The CMA are blocking the deal on the basis that one day that might change. And hey, it might still, but just like with VR we've been waiting a very long time for it to kick out of 2nd gear.
Secondly, I'm as sceptical about the intentions of Mega-corps as the next person, but turning around to them and saying 'Only smaller companies are allowed to produce innovative new products because you all can't be trusted' seems like throwing the baby out with the bathwater. The CMA in this ruling is basically telling Microsoft to cool it and stay in their lane (their comment about there being no point challenging Google and Apple in the mobile market was very telling). Companies the size of Microsoft, if this decision sticks, are going to be very wary of developing new ideas if a regulator can then say, 'oooof too bad, if only you were a new startup then you'd have been fine, but we can't risk you getting any bigger.'
I mean, we all know Microsoft would have no qualms dominating the game market if they had half a chance but currently I don't think the argument that they're one mega acquisition away from achieving this holds any water. And if the end result of this is that Microsoft significantly scales back their console plans going forward, then the CMA have unwittingly handed Sony total dominance in the console space on a silver platter.
TomNookYankees
Koopa
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On one hand it’s true that, for now, Microsoft has been much more willing to recognize unions than activision. Hard to get any worse than AKB.
But that’s the thing. It’s possible that later on leadership changes to something more like the current AKB leadership and if that happens then the increased market consolidation would make the situation even worse.
If Unions were more powerful than they currently are I wouldn’t be as worried.
cheesecake
Rattata
Wouldn't this massively affect Microsoft's plans for the gamepass? If the former was supposed to be boosted with the acquisition of AK, then this would reduce customers from just getting it - and we've seen microsoft's gaming sales fall off already. If the whole thing is off, would it possibly mean a greater focus back to console development or is microsoft way too deep into gamepass to draw back somewhat?
BRRRRRING
Octorok
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From the start, I've thought people are over emphasizing "plans for Gamepass!" rather than the usual acquisition metrics of...
1) Stock is outright underpriced (thanks to the horrible scandals)
2) Idea for underutilized IP (like Starcraft)
3) Foothold in the new domains (mobile, via King)
4) Locking down some major series (COD).
5) Being able to run more efficiently by firing a shitload of people for "redundancy".
Microsoft has a huge amount of money they can spend, but if there were other companies that were more lucrative acquisitions by traditional metrics they would have gone for those instead. AB was super appealing for all of these reasons.
1) Stock is outright underpriced (thanks to the horrible scandals)
2) Idea for underutilized IP (like Starcraft)
3) Foothold in the new domains (mobile, via King)
4) Locking down some major series (COD).
5) Being able to run more efficiently by firing a shitload of people for "redundancy".
Microsoft has a huge amount of money they can spend, but if there were other companies that were more lucrative acquisitions by traditional metrics they would have gone for those instead. AB was super appealing for all of these reasons.
boodream
Paratroopa
Microsoft should try to go for an acquisition of all the regulatory authorities. Problem solved. And they would finally have a fair chance to fight.
PixelKnight
Observing the process
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I was idly scrolling through the report and I thought some of the figures of the size of the UK market and the speed of growth (and forecast) were interesting.
www.gov.uk
It was odd to see a regulatory body effectively say ‘Microsoft’s proposal of certain behaviours over 10 years (eg CoD on other platforms) would have needed even more regulation (ultimately the CMA) and we don’t want to do that instead of leaving it to market forces’. I don’t know, it’s just rare to see a regulator say ‘regulation says no, but further regulation would be even worse’
Microsoft / Activision deal prevented to protect innovation and choice in cloud gaming
The CMA has prevented Microsoft’s proposed purchase of Activision over concerns the deal would alter the future of the fast-growing cloud gaming market, leading to reduced innovation and less choice for UK gamers over the years to come.
It was odd to see a regulatory body effectively say ‘Microsoft’s proposal of certain behaviours over 10 years (eg CoD on other platforms) would have needed even more regulation (ultimately the CMA) and we don’t want to do that instead of leaving it to market forces’. I don’t know, it’s just rare to see a regulator say ‘regulation says no, but further regulation would be even worse’
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ZephyrPhoenix
Everything Rises and Everything Eventually Falls
I think alot of you are celebrating too early. And also, be careful what you wish for.
BRRRRRING
Octorok
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What is the Monkey's Paw you are threatening here? Tech conglomerates are bad, and have been bad, and were getting worse. Politicians like Sanders are Warren are unfortunately minority views and in a country where neoliberal regulatory standards from the 1980s have not caught up with the current nature of tech conglomerates.
Yeah. It is a massively growing market, but Google wasn't seeing the type of profit they wanted and that faction lost out, but the market is still growing without them. The economics of scaling are the hard part.
I was idly scrolling through the report and I thought some of the figures of the size of the UK market and the speed of growth (and forecast) were interesting.
Microsoft / Activision deal prevented to protect innovation and choice in cloud gaming
The CMA has prevented Microsoft’s proposed purchase of Activision over concerns the deal would alter the future of the fast-growing cloud gaming market, leading to reduced innovation and less choice for UK gamers over the years to come.
Yeah. It is a massively growing market, but Google wasn't seeing the type of profit they wanted and that faction lost out, but the market is still growing without them. The economics of scaling are the hard part.
Galgavias
Koopa
There are two possible future scenarios which could play out. Firstly, Microsoft admit defeat on Acti-Blizz and put the money they'd allocated to use elsewhere, basically restarting what they were doing pre-Bethesda where they were hoovering up previously unaffiliated studios left and right, invariably including some of our favourite indie studios in the process. Meanwhile Acti-Blizz continue their decline as their dependency on COD only intensifies, pushing any and all other franchises to the sidelines (sorry Crash fans), their employees lives being filled with uncertainty as the company value trickles further until someone else comes along and buys them for even cheaper (I can hear Tencent licking their lips from here).
The second scenario is Microsoft begin to get tired of chasing the gaming market for little return, and start scaling back on their investment in Xbox as a whole, in which case Sony essentially becomes a monopoly in the home console space by default.
So yeah, no good options here really. For the best case scenario, we'd have to go back in time and get Microsoft investing in building their own studios from scratch to bring more jobs to the industry and develop their own best selling series of games (which isn't easy btw, even for a company as big as them), meanwhile Bobby Kotick mysteriously disappears upwards in a beam of light from a passing UFO, meaning he can no longer suck Acti-Blizz dry from within and allow the company to restructure and diversify their output. But hey, Captain Hindsight and all that.
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