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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

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Capitalism sucks and corporate acquisitions must be stopped, but this one being denied because of fear about the sanctity of cloud gaming is hilarious.
 
NarohDethan said:
Capitalism sucks and corporate acquisitions must be stopped, but this one being denied because of fear about the sanctity of cloud gaming is hilarious.
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Then Xbox should have stopped hyping up cloud gaming as one of the major futures of gaming, lol.

gamefreaks365.com

Microsoft CEO Satya Nadella and Phil Spencer 'All In' on Xbox - Game Freaks 365

Xbox boss Phil Spencer spoke with Microsoft Chief Executive Officer Satya Nadella about games. It was a really interesting conversation on games, services, and the much-anticipated Xbox Cloud Gaming.
gamefreaks365.com gamefreaks365.com

How Microsoft Is Ditching the Video Game Console Wars

Known for the Xbox, Microsoft has been diversifying away from boxy hardware in favor of reaching millions more new gamers.
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Me when I make ridiculous claims to boost my stock price: "Ha ha, this rules!"

Me when regulators take my ridiculous claims seriously when I'm trying to make one of the bigger mergers in software history: "Well this fucking sucks, what the fuck."
 
boodream said:
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.
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They already have the Washington state legislative representatives in their pocket, so this won’t be as hard as you think.
 
I think MS should just turn around and use that same money to buy out exclusives full stop. Those can't be influenced by regulatory bodies.
 
Machrider said:
I think MS should just turn around and use that same money to buy out exclusives full stop. Those can't be influenced by regulatory bodies.
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What is the return on investment of buying up full-fledge exclusives? Microsoft really does not publish many videogames per year. The only way to get full exclusives is to be the publisher, which they don't want to do, so... what then?
 
BRRRRRING said:
What is the return on investment of buying up full-fledge exclusives? Microsoft really does not publish many videogames per year. The only way to get full exclusives is to be the publisher, which they don't want to do, so... what then?
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Presumably the idea is in the same capacity Sony does with Square games
 
Brock Reiher said:
Presumably the idea is in the same capacity Sony does with Square games
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Which Square games has Sony published or had full exclusivity to? We have... 1 game out of the last five years that seems like there might be a restrictive exclusivity deal, but we genuinely don't know.

The market for JRPGs is like 10 times the size on PS than an Xbox, so the cost of getting exclusivity for the lower-sales platform is going to be gargantuan. It isn't some symmetric offer, and Square Enix basically hasn't done any true platform exclusives within the last five years.

Deals are cheap when they are for the platform that is like 80% of the market rather than 10%. And that's assuming that deals are the worst case scenario, which there is no evidence of. People are just conflating marketing deals, publishing deals, short-term exclusivity deals, or short-term subscription exclusivity as if they are all the same, but they have wildly different costs and benefits for each involved parties.
 
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Galgavias said:
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.
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The CMA report went into this: cloud helping represents a growing segment of the market, one that is consistently tracking upwards. The CMA are blocking the deal on the basis that it's already worth the same value as the UK music industry (or very close to being worth the same).

Galgavias said:
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.'
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I'm sorry, but... no?

There's no technological innovation being stymied here. No one is stopping MS from investing further in cloud technology or making their service better. All that is happening is that the CMA are saying MS cannot use the purchase of a billion dollar publisher to do this.

Microsoft still has a million and one ways to make their tech better and their service more enticing. They don't need to buy this one and only publisher to do that, and it runs the risk of them being able to undercut or hobble competitors, so it's good that the CMA has stepped in and done what a regulator should do.

If MS bought Activision, then ten years down the line has a financial crisis and lays everyone off/shuts everything down, the conversation would absolutely be about how regulators could allow such a huge publisher to get consolidated into a company like MS.
 
BRRRRRING said:
Which Square games has Sony published or had full exclusivity to? We have... 1 game out of the last five years that seems like there might be a restrictive exclusivity deal, but we genuinely don't know.

The market for JRPGs is like 10 times the size on PS than an Xbox, so the cost of getting exclusivity for the lower-sales platform is going to be gargantuan. It isn't some symmetric offer, and Square Enix basically hasn't done any true platform exclusives within the last five years.

Deals are cheap when they are for the platform that is like 80% of the market rather than 10%. And that's assuming that deals are the worst case scenario, which there is no evidence of. People are just conflating marketing deals, publishing deals, short-term exclusivity deals, or short-term subscription exclusivity as if they are all the same, but they have wildly different costs and benefits for each involved parties.
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Not full exclusivity, the same exclusivity Sony has for square games.
 
Mekanos said:
shareholders can’t be too pleased with Phil right now, what does he have to show for Xbox at the moment?
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I don't think shareholders are too bothered. Video games is small potatoes for a company the size of Microsoft and despite all the feet stomping, this last Q4 was still apparently the XBox division's 2nd best Q4 in history.
 
Machrider said:
I don't think shareholders are too bothered. Video games is small potatoes for a company the size of Microsoft and despite all the feet stomping, this last Q4 was still apparently the XBox division's 2nd best Q4 in history.
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Based on what? GamePass? Their hardware and software sales were both down last year, to my knowledge.
 
JazzPotatoes said:
There's no technological innovation being stymied here. No one is stopping MS from investing further in cloud technology or making their service better.
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Technically true, but this definitely discourages MS from investing in new tech, because successfully carving out a new market has resulted in them being unable to make this acquisition.

JazzPotatoes said:
They don't need to buy this one and only publisher to do that, and it runs the risk of them being able to undercut or hobble competitors
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Frankly speaking, I still find the idea that ABK is an essential industry input is still contentious. In fact as far I can tell, CMA does not have any material analysis about how important ABK IPs are important to cloud gaming. They just kinda assume they are. Which is an axiom I find doubtful, given that Nintendo and Steam are quite capable of competing without ABK IPs.
 
CoD not running on Switch argument is moot. It can run it, but it doesn't have to run well. Heck, look at Apex. It's playable but not an ideal experience.
 
This is wild - so much hinged on the deal going through for Mircrosoft. Their gaming sector as it currently exists is now stuck between a rock and a hard place with this falling through.

I really wonder what they will do now. I doubt upper management at Microsoft has much more patience left for the gaming segment turning green.
 
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Brock Reiher said:
Not full exclusivity, the same exclusivity Sony has for square games.
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Which exclusivity? Please elaborate on your understandings of the deals on literally 5% of SE's output (actually, lower than that, but whatever).

There is no reason for SE to go for a short-term exclusivity on a platform that has historically had dire sales for JRPGs, and there is no reason for Microsoft to fork up the massively increased price that SE would need to justify it. There's such a gargantuan gap between what they expect out of a deal which is why it has never happened, and why Microsoft has never really been able to pull of a deal like that in the past for a JRPG.
 
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JazzPotatoes said:
I'm sorry, but... no?

There's no technological innovation being stymied here. No one is stopping MS from investing further in cloud technology or making their service better. All that is happening is that the CMA are saying MS cannot use the purchase of a billion dollar publisher to do this.

Microsoft still has a million and one ways to make their tech better and their service more enticing. They don't need to buy this one and only publisher to do that, and it runs the risk of them being able to undercut or hobble competitors, so it's good that the CMA has stepped in and done what a regulator should do.

If MS bought Activision, then ten years down the line has a financial crisis and lays everyone off/shuts everything down, the conversation would absolutely be about how regulators could allow such a huge publisher to get consolidated into a company like MS.
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I mean, this decision will absolutely give companies like Microsoft pause in their innovation and investment plans because acquisitions are essential to how they operate. It's how they grow their business. If a company invests billions into a project which involves acquisitions, only to see it come crashing down in an instant, they won't invest full stop. They'll just play it safe and hope the status quo remains favourable to them (and generally the status quo never does). There should be oversight and due process for sure, but decisions should be made on firm evidence as opposed to hypotheticals which don't hold much scrutiny. Maybe the acqusition would have turned Microsoft into the undisputed market leader, but I don't think you can look at the current gaming trends and sales data and claim it's exactly a slam dunk.

The CMA have zoned in on a hypothetical future in which cloud gaming has become the dominant format by which we consume our hobby as the reason for curbing Microsoft's ambitions. Now admittedly Microsoft made a rod for their own back by bragging about the power of the cloud at every opportunity, but as things stand, there is very little evidence that such a future is going to be happening anytime soon. This isn't a Facebook/Instagram situation which was clearly an attempt to assimilate the competition before they got bigger. Cloud gaming is currently unpopular and unproven financially (and that's a generous assessment) so to use the argument of 'but one day it might be the next big thing' is a nebulous one at best.

On your final point, we can flip it around. Activision-Blizzard are currently not a healthy company. Their value is down, their reputation in tatters, their workforce demoralized and the company as a whole massively dependent on one mega IP to the point that nothing else matters except for getting the next COD out the door. It's not a sustainable business model. In ten years time we could be seeing them having to significantly jettison parts of their business to stay afloat, or maybe even go under as a whole if a buyer can't be found. Again we're speaking in hypotheticals, but is that future preferable to them ending up under Microsoft?
 
Galgavias said:
I mean, this decision will absolutely give companies like Microsoft pause in their innovation and investment plans because acquisitions are essential to how they operate. It's how they grow their business. If a company invests billions into a project which involves acquisitions, only to see it come crashing down in an instant, they won't invest full stop. They'll just play it safe and hope the status quo remains favourable to them (and generally the status quo never does). There should be oversight and due process for sure, but decisions should be made on firm evidence as opposed to hypotheticals which don't hold much scrutiny. Maybe the acqusition would have turned Microsoft into the undisputed market leader, but I don't think you can look at the current gaming trends and sales data and claim it's exactly a slam dunk.

The CMA have zoned in on a hypothetical future in which cloud gaming has become the dominant format by which we consume our hobby as the reason for curbing Microsoft's ambitions. Now admittedly Microsoft made a rod for their own back by bragging about the power of the cloud at every opportunity, but as things stand, there is very little evidence that such a future is going to be happening anytime soon. This isn't a Facebook/Instagram situation which was clearly an attempt to assimilate the competition before they got bigger. Cloud gaming is currently unpopular and unproven financially (and that's a generous assessment) so to use the argument of 'but one day it might be the next big thing' is a nebulous one at best.

On your final point, we can flip it around. Activision-Blizzard are currently not a healthy company. Their value is down, their reputation in tatters, their workforce demoralized and the company as a whole massively dependent on one mega IP to the point that nothing else matters except for getting the next COD out the door. It's not a sustainable business model. In ten years time we could be seeing them having to significantly jettison parts of their business to stay afloat, or maybe even go under as a whole if a buyer can't be found. Again we're speaking in hypotheticals, but is that future preferable to them ending up under Microsoft?
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They have the right to grow organically. They have the right to invest to be good instead of just buying stuff. They are alreading doing that. Of course, it is more laborious, slower and more difficult. But they have already had real successes with Xbox, far more meritorious than writing checks.
 
BRRRRRING said:
Which exclusivity? Please elaborate on your understandings of the deals on literally 5% of SE's output (actually, lower than that, but whatever).

There is no reason for SE to go for a short-term exclusivity on a platform that has historically had dire sales for JRPGs, and there is no reason for Microsoft to fork up the massively increased price that SE would need to justify it. There's such a gargantuan gap between what they expect out of a deal which is why it has never happened, and why Microsoft has never really been able to pull of a deal like that in the past for a JRPG.
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They will do the same thing Sony did with Square with other companies to make sure Sony doesn't get those games. Microsoft has much more money than Sony.
 
hologram said:
We've become so used to corporate acquisitions that we're seeing takes like "$70bn acquisitions are how companies grow"
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I'd be fine with this deal being blocked if there was a strong argument beyond "big tech bad" and "cloud gaming may one day be the dominate market and this deal may give Microsoft a monopoly on it". Even if cloud does explode, I fully expect ABK to either have their own streaming subscription service, or sign some exclusive deal with Microsoft, Sony, Amazon, etc for all their content like we see in tv/film streaming. I just don't think any argument about ABK/CoD being "essential to compete" would ever hold up to any real world test.
 
Galgavias said:
There should be oversight and due process for sure, but decisions should be made on firm evidence as opposed to hypotheticals which don't hold much scrutiny.
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How should regulators go about collecting firm evidence of ways corporate mergers will be deleterious to market health in the future, without using hypotheticals?
 
meatbag said:
Acquisitions are one of the ways companies can grow, yes. That's simply how the current prevailing model of capitalism works.
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This is one of the models. It is not the only one. And it poses competitive and ethical problems, in a general way, to substitute industrial capitalism, based on innovation, know-how and performance, with financial capitalism based on acquisitions and oligopolies.
 
meatbag said:
Frankly speaking, I still find the idea that ABK is an essential industry input is still contentious.
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COD is responsible for a ridiculous amount of money being spent in the gaming industry each year, both in terms of money spent on games as well as micro transactions.

That's one ABK franchise. When you then factor in that they also have Overwatch, WoW and Diablo, then it becomes obvious just how much revenue ABK makes within the games industry each year. They are genuinely larger than any other third party publisher by marketshare and revenue.

meatbag said:
In fact as far I can tell, CMA does not have any material analysis about how important ABK IPs are important to cloud gaming. They just kinda assume they are. Which is an axiom I find doubtful, given that Nintendo and Steam are quite capable of competing without ABK IPs.
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Nintendo got both Overwatch and Diablo 3 on the Switch, and both of those were seen as a big deal, with lots of promotion given to highlight their release on the platform. Switch also got Crash Bandicoot, CTR, Tony Hawk and the Spyro remakes from Activision. This idea that Activision/Blizzard have boycotted Nintendo is not the case.

Activision/Blizzard have a combined portfolio of some of the most succesful and popular gaming franchises in the industry. Any cloud service which has those series as exclusives is going to be able to force a dominant place into the cloud platform sphere, just because no one else is in the position of being able to offer COD + Diablo + Overwatch + Doom + Halo + Gears + Warcraft + Starcraft + etc etc

It's a situation that has come about not through real competition, but because one company with bags of money wants to buy another company with bags of money to leverage a dominant position in an upcoming industry.
 
BassForever said:
I'd be fine with this deal being blocked if there was a strong argument beyond "big tech bad" and "cloud gaming may one day be the dominate market and this deal may give Microsoft a monopoly on it". Even if cloud does explode, I fully expect ABK to either have their own streaming subscription service, or sign some exclusive deal with Microsoft, Sony, Amazon, etc for all their content like we see in tv/film streaming.
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If Microsoft purchases ABK, then there is no incentive for them to spend money setting up a separate streaming service for those games, rather than just rolling into the infrastructure and service they already have set up with xCloud and Gamepass.
 
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BassForever said:
I'd be fine with this deal being blocked if there was a strong argument beyond "big tech bad" and "cloud gaming may one day be the dominate market and this deal may give Microsoft a monopoly on it". Even if cloud does explode, I fully expect ABK to either have their own streaming subscription service, or sign some exclusive deal with Microsoft, Sony, Amazon, etc for all their content like we see in tv/film streaming. I just don't think any argument about ABK/CoD being "essential to compete" would ever hold up to any real world test.
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If you fully expect ABK to have their own streaming service, that would be competition to Microsoft and is actually an argument in favor of blocking the deal.

Cloud gaming aside, though, what are your arguments in favor of the acquisition?
 
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Brock Reiher said:
They will do the same thing Sony did with Square with other companies to make sure Sony doesn't get those games. Microsoft has much more money than Sony.
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Good luck with that! It is way easier to get short term exclusivity via a marketing deal if your platform is the one that was going to be 80% of the sales anyway. Microsoft ain't gonna do shit, because it is such an atrocious deal for them.
 
BRRRRRING said:
Good luck with that! It is way easier to get short term exclusivity via a marketing deal if your platform is the one that was going to be 80% of the sales anyway. Microsoft ain't gonna do shit, because it is such an atrocious deal for them.
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Like I said they have much more money
 
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hologram said:
If you fully expect ABK to have their own streaming service, that would be competition to Microsoft and is actually an argument in favor of blocking the deal.

Cloud gaming aside, though, what are your arguments in favor of the acquisition?
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This. The CMA doesn’t care about one corporate entity over another. What they care about, and the remit given to the independent panel when considering the acquisition, is whether the acquisition is likely to offer a better or worse future for UK customers in the cloud gaming arena. That’s who they are instructed to look out for the interests of. If MS can come up with another argument during the appeal that shows how somehow the acquisition would be a better, or at least neutral, deal for UK customers going forwards over the next however many years, it’s likely to succeed. If it’s just ‘but… we want all the money even if it means less choice for your citizens’, not so much.
 
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Probably a good thing! I always thought Microsoft would be way better served investing a fraction of what they were gonna pay for ABK into renovating and integrating their existing studios. MGS has tons of games announced and in the works already, but they always seem to have trouble getting them out the door, and in good condition.
 
Microsoft in many ways has only itself to blame for the situation they're in, they have been in the industry for over 20 years and if they had grown organically by now and grown their brand they would not now be having to buy their way in to content.
Until they exit the power wars with Sony scale back game ambitions to 3-4 years development max. in the way Nintendo do they will always struggle to supply new game content for Gamepass.
I seriously doubt that the merger would do much anyway for productivity. Activision-Blizzard has had to consolidate so much that many of its studios are now dedicated to Call of Duty, and given the promises made to Nintendo etc. some of Microsoft's would have to be moved to Call of Duty also. Let's not forget the redundancies they have already announced. Hardly any studios/employees left to do anything with Activision content anyway LOL
 
hologram said:
If you fully expect ABK to have their own streaming service, that would be competition to Microsoft and is actually an argument in favor of blocking the deal.

Cloud gaming aside, though, what are your arguments on favor of the acquisition?
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My "for" arguments are mostly focused on ABK. Kotick being gone after the sale, employees being unionized, ABK titles seemingly being more widely available via the cloud streaming deals Microsoft was signing. I also believe that from the perspective of consumers, a more competitive Xbox and a big company investing hard into both a game subscription service and cloud streaming will ultimately lead to more competition (we've seen sony offer a better ps+ to better compete with GP). Pragmatically I'm also a rule of law kind of person, and I genuinely stand by the belief that gaming is such a vast and growing industry that no one publisher or ip is remotely essential where such a deal can lead to anti-competitive/monopolistic practices.

I own an xbox series s and a ps5, and the only ABK I give a rats ass about is Diablo 4. D4 is a game I'm buying a physical copy (probably on ps5) regardless even if it was available day 1 on GP as I'm a big fan of physical and collect games. If I'm letting my bias come in, I'd root for the outcome that gives me the best odds of Diablo 4 coming to the Switch/successor, which probably means I should be glad this deal took a major blow today.
 
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kimbo99 said:
CoD not running on Switch argument is moot. It can run it, but it doesn't have to run well. Heck, look at Apex. It's playable but not an ideal experience.
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Yeah they should have no excuses for switch 2, at least as long as ps4/Xbone is supported.

I still really want cod on switch/switch 2, but this is for the greater good..
 
To be honest it might be better in the long run for MS to not get it. Like what was the point of having Activision if it meant they had to agree to a bunch of stipulations that Call of Duty would have to be on Playstation platforms.

Better off spending that money on exclusives.
 
We acknowledge Townsend is not a good person, but misogyny will not be tolerated. Do not use this language in critique. - Irene, xGhost777, Red Monster
"Finally !"
"Good !"

Did you know (Gaming ?) : If the deal is agreed, that fucking pig Bobby Kotick who covered sexual harassers and employed a pro-torture MAGA bitch as Human Ressource, will leave once and for all. But since it won't happen, I guess everyone is happy now, you'll be able to play Call of Duty on PS5 and feel good about it.

Don't forget to buy Diablo 4, I heard Blizzard did nothing wrong lately and everyone supports the company, nothing happened at all.
Please just don't read about that woman who took her life because of her boss at Blizzard sexually harassing her, that's would make you feel bad.
 
Machrider said:
To be honest it might be better in the long run for MS to not get it. Like what was the point of having Activision if it meant they had to agree to a bunch of stipulations that Call of Duty would have to be on Playstation platforms.

Better off spending that money on exclusives.
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Depends. For Xbox as a console, they'd be better off buying CDPR, Sega, Capcom, etc. as those could be made exclusive without much issue probably. For Microsoft as a whole though, it was less about making COD exclusive and more about synergies with mobile, PC and Game Pass (not to mention, the stuff that isn't COD had no exclusivity stipulations attached). Arguably for their mobile goals keeping COD multiplatform was more useful than having it exclusive.

It's hard to imagine that if the appeal fails they'll just sit back and go "oh well, we tried". The 70B won't all go towards gaming but won't be shocked if they start being a bit more aggressive when it comes to timed exclusives and funding third party content.
 
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