ItWasMeantToBe19
Manakete
I'm done playing these games. Microsoft will never threaten the national security of the UK to get this acquisition to happen. You are lost in a really disturbing world and need to come back to the real world.
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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'm done playing these games. Microsoft will never threaten the national security of the UK to get this acquisition to happen. You are lost in a really disturbing world and need to come back to the real world.
You're saying Microsoft should be forced to do business in the UK, even if the UK says they can't do it anymore? I'm sure Microsoft would prefer to stay.
ItWasMeantToBe19
Manakete
Microsoft is just going to drop their appeal in 2024 or 2025 and will not purchase Activision. That is actual reality.
Why would they do that and lose billions of dollars instead of just continuing with the knowledge that they likely won't face major consequences?
boodream
Paratroopa
Administrations use free office suites you know. But sorry I miss your point.
That's good to know. In that case it wouldn't be a threat to UK's security at all, just very inconvenient. I still think they'd rather keep them around if only because of the people in the country using Windows.
Getting back on topic:
Idas over at Era has a more comprehensive overview of the CMA's findings here. Key point:
It's also worth noting that third parties have brought up the possibility that should the merger fail, MS and ABK would instead enter into a long term exclusivity contract. CMA seems to have no issue with this.
Idas over at Era has a more comprehensive overview of the CMA's findings here. Key point:
I feel like this will be one of the central criticisms of the CMA's case. The CMA established that MS has >50% of the cloud market by... counting all Game Pass Ultimate users as cloud users, regardless of whether they actually use xCloud or not.
It's also worth noting that third parties have brought up the possibility that should the merger fail, MS and ABK would instead enter into a long term exclusivity contract. CMA seems to have no issue with this.
Probably the funniest part of the report to me. This 3rd party is likely Sony, and they're saying that they don't want CoD on Game Pass because they would have to put their first party games on their own sub service. And subsequently lose their "incentives" to develop first party games.
ItWasMeantToBe19
Manakete
Microsoft and Activision would never enter a long term exclusivity contract for Call of Duty.
Microsoft would have to pay multiple billions per year and would have to do this forever or they would immediately lose market share back to Sony.
It's not brought up very much online, but third-parties very much want this purchase to go through as regulators saying "no, there's going to be no more acquisitions happening" will immediately lower the stock price of companies like Ubisoft that are getting a stock boost due to the potential of being bought.
Microsoft would have to pay multiple billions per year and would have to do this forever or they would immediately lose market share back to Sony.
It's not brought up very much online, but third-parties very much want this purchase to go through as regulators saying "no, there's going to be no more acquisitions happening" will immediately lower the stock price of companies like Ubisoft that are getting a stock boost due to the potential of being bought.
Spyder
Shriekbat
You should switch to a different forum to prove a point
I agree that they would never do this since it does not make financial sense.
That's hilarious. Microsoft's "cloud is the future" rhetoric is blowing up in their face.
JazzPotatoes
Koopa
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I see we've reached the point of the discussion where MS decides to bin 3% of their entire global revenue by committing to buying a videogame publisher.
Some of the posts here are absolutely nonsensical, it has to be said
Some of the posts here are absolutely nonsensical, it has to be said
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I'm a civil servant in the UK, we absolutely use a ton of MS apps including Office. I would say a significant portion of my job is done using MS apps, to say nothing of our use of Windows.
The idea that MS is going to stop doing business in the UK, or that they're just going to try and ignore the CMA (which would absolutely provoke a response) is for the birds.
It's not about starting with an intended outcome in mind and working your way back from there. It's about starting by examining a case according to the terms the side you will end up having to argue against has already agreed to. If you discover reasons to be concerned in that first step, the resulting case will be stronger, because its foundations can't be contested. If there is no problem, you use different lenses to make sure you didn't miss anything, but you'll have to work harder to establish the necessary premisses and they will be objected to.
What is the danger in erring on the side of making too fine distinctions in markets rather than lobbing too many into one market? I can see the risk of missing developing monopolies in key areas if you look at too broad a picture. What's the equivalent for concentrating on possibly too small a scope?
Like the hypothetical "platforming console market" is stupid because it has less backing it up than the HD twins distinction. But also if there was enough talk and belief in such a thing between big players in the industry, that it made a regulatory body say "Okay, in that case, we prefer to avoid a potential mascot platformer monopoly", where is the harm to customers of Nintendo, Activision, Microsoft or other publishers and developers?
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Look too closely and you see monopoly everywhere, becoming meaningless. An amoeba takes up your entire field of vision. Allowing Sony to define the terms of a high class console market or Nintendo to define the terms of a platforming console market allows them to prevent a merger that they don't want to see for their own business purposes, regardless of impact to customers or other businesses in the actual overall market. Microsoft went along with Sony's framing when presenting their own math as counterpoint, but that seemed to be because they were reacting to objections raised.
If it got that extreme, yes. But we're not anywhere near a close-up on an amoeba here. And nothing says regulators aren't free to consider impact on customers independent of the terms a business has set for itself. But considering regulators have missed by because they took too high of a bird's eye view in the recent past, what is the practical harm of adjusting a bit to the opposite direction?
TSR3
Pilotwings
Microsoft have plenty of scope to appeal, and they may well win their argument, like they won the argument about not benefiting if they made CoD exclusive to Xbox. Which makes it all the more confusing why Brad Smith threw his toys out of the pram with that tweet. It only seems to make (a limited) sense if he thought there was no way of winning in the UK, and he thought being political was a clever way to influence the EU regulators (which is highly unlikely). For a very highly paid lawyer, it seems to me to display a remarkable level of recklessness, and shallowness of insight. Unless I'm missing something?
BRRRRRING
Octorok
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Thinking about it in terms of Monopoly Power is kind of old and misleading view. Market Power is a better and more modern reflection of current views-- when an entity becomes too big to have an unreasonable sway on one or multiple markets.
Microsoft, is, like, clearly there in a whole bunch of domains, largely in part due to decades of regulatory failures. Large tech mergers just made things worse and worse in many aspects over the years, and the largest tech acquisition ever would clearly reduce bargaining power of workers due to the scale of the consolidation.
The entire (totally batshit insane arguments) that Microsoft could threaten the entire PC market of an objecting country over them not rubber stamping the largest tech acquisition ever is a demonstration of how much entangled power MS has. The threats won't happen because it would wipe out hundreds of billions of stock value overnight, but they clearly have weight to apply pressure.
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I think it is a general harm that one competitor in a market can play a part in vetoing the actions of another competitor by convincing regulatory bodies with bad faith framing.
boodream
Paratroopa
Would be only for reasons of costs, there has been a real shift of the administrations to alternatives. This movement is not particularly new, as shown in this Italian example already dating from 2016. Microsoft is no longer absolutely alone as it was in the past, alternatives are not only available and viable, but they are also already widely used, although this is obviously not the case everywhere.
In the first place, Microsoft only agreed to the terms that Sony set is because the CMA determined Sony’s definition was valid.
Therein lies the rub. I disagree with CMA’s assessment that Nintendo does not compete (or compete “closely enough”) with Sony and Microsoft, and that Nintendo is not a potential entrant into the cloud gaming market.
Put it this way: Sony could declare that Nintendo has a dominating marketshare of the hybrid gaming console market and convince CMA they can’t buy additional dev studios because of it.
More to the point, in this specific case, CMA concludes that by blocking the merger, they ensure that cloud providers can still access ABK IPs. Except that’s not how it works in reality— the smaller cloud providers won’t be able to pay to put CoD on their platforms, and ironically the only ones who could actually afford the fee are Sony and MS. All in all, it’s not as simple as acquisition blocked = fair competition.
No idea either, it was definitely a dumb move.
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This is the most hilarious situation that ever happened in the videogame industry, period. It surpasses Sega's rise to downfall story.
But if the Disney/Fox merger was allowed to happen, I don't see any reason for the Microsoft/Activision merger to not happen
It's just that they got lost in their own definitions of the market and that's why it's so hilarious
But if the Disney/Fox merger was allowed to happen, I don't see any reason for the Microsoft/Activision merger to not happen
It's just that they got lost in their own definitions of the market and that's why it's so hilarious
BRRRRRING
Octorok
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This is the most hilarious situation that ever happened in the videogame industry, period. It surpasses Sega's rise to downfall story.
But if the Disney/Fox merger was allowed to happen, I don't see any reason for the Microsoft/Activision merger to not happen
Television and Movies aren't remotely as prone to runaway consolidation and market power as tech industries are.
It was also a bad merger, and previous regulatory failures shouldn't be used as justification for future regulatory failures. That just leads to a zombie corpse of neoliberalism that was propped up in the 80s and 90s and just continues to wreck havoc today (which I don't think is a bad analogy of how US regulatory bodies got so bad in the first place).
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It was a bad merger yes, and I'm still in disbelief it was approved, but then that's Microsoft's right to argue that they should get the same slice of the pie
especially when all the issues they're tumbling on are about their own definitions of what the videogame market is, which was also the point of the Disney/Fox merger but for a different industry that's getting less and less diverse too. The rest is very true, but it's a little bit out of our hands here unfortunately. This thing is gonna be approved. I'd argue it's even a more favorable situation than Disney/Fox because Microsoft is somewhat platform agnostic.
Actually given the proceedings of this case so far, it's more likely to be blocked than let through.
Were Microsoft not free to dispute the definition as they, successfully, did for other claims and conclusions by the CMA?
I'm looking for potential pitfalls where going with the industry's self-understanding could hurt the CMA's case or consumers. Where's the harm in Nintendo not being allowed to buy a dev studio? It'd be dumb, but how does it backfire? I don't know what "general harm" means except regulatory malpractice, which can happen while taking too broad a view of a market just as well as with a more piecemeal approach.
Two offers to pick from is still better than only one option and it keeps the lane open for a third, fourth or fifth option to pop up. So that point doesn't seem to be an example for a decision leading to unintended harmful consequences because it was made based on a narrow definition of the market.
They did, and were shot down.
In that scenario, Nintendo not being able to buy a dev studio potentially means they cannot provide supply to customers. Which weakens their platform while hypothetically, SIE and MS can keep acquiring studios because they're not part of the hybrid console market.
Know what, I'll concede the point. I was trying to reason it out and I realized I disagree with ABK IPs being such crucial inputs in the first place.
I'm mainly interested in the general practice of subdividing markets and its problems. If you can reason out a way this hypothetical plays out badly for regulators or customers, that's still valuable.
In the specifics, I disagree with the CMA myself. But what is the potential regret a regulator might have for dividing up two closely related business models into seperate markets instead of looking at them as only one market? What's the flaw that will make them course correct the other way next time? Buying dev studios isn't the only, or most common way, to get get games on platforms, so that's not it. Pluse, presumably, SIE and MS would be bound by similar intervention if they tried the same thing as they are part of some market.
So if Microsoft/Activision falls through, who comes in to try and purchase Activision?
Investors want that $95 per share and it will take a long while before Activision gets back to that point on its own.
Tencent was buying up Ubisoft stock last year; but I wonder if they would shift gears and make a run at Activision if Microsoft fully backs out.
Investors want that $95 per share and it will take a long while before Activision gets back to that point on its own.
Tencent was buying up Ubisoft stock last year; but I wonder if they would shift gears and make a run at Activision if Microsoft fully backs out.
robertman2
Chain Chomp
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TSR3
Pilotwings
Tencent will probably hit similar regulatory hurdles that Microsoft has (if not exactly the same objections).
TSR3
Pilotwings
The precedent the regulators have in mind is Facebook-Instagram, and in that case the regulators now think of it as a bad precedent.It was a bad merger yes, and I'm still in disbelief it was approved, but then that's Microsoft's right to argue that they should get the same slice of the pie
The rest is very true, but it's a little bit out of our hands here unfortunately. This thing is gonna be approved. I'd argue it's even a more favorable situation than Disney/Fox because Microsoft is somewhat platform agnostic.
Well, it's due diligence to define markets properly. Most regulators have to contend with other agencies that countercheck their work.
Aside from that, the answer would be none, I suppose. They're scaring off companies, that's about it.
EDIT: Another thing I thought of is that what CMA says now will obviously influence how others take their future statements. But that's for the future CMA to worry about. Misreads of the market could also result in less competition.
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JazzPotatoes
Koopa
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The EC is not going to approve a multi billion tech merger between two massive corporations just to spite the UK. The UK isn't important enough to EU proceedings any more for that kind of retaliatory behaviour, and they're not going to put any risks on the EU tech sector just to get one over the CMA.
Some of the posts in this thread are getting a tad silly. The CMA/Microsoft story is already out of the news in UK business media. It's not that important of a story here. Microsoft are pissed off, which is expected, but no one else really cares because it was always a massive behemoth outlier of a case that has no material impact on the rest of the tech sector or investments in the UK.
boodream
Paratroopa
Given all my previous interventions on the subject, I did not expect to have to specify the ironic nature of my message.
The whole vibe of reactions on the Internet that instills the idea that "Microsoft can just punish the UK, what even is by the way, i think it's some sort of sandwich?" is appalling.
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Didn't they in action? By pushing things like their 10 year agreements with entities outside of the Sony-MS bubble like Nintendo, Valve, NVIDIA. To which the reaction seems to have been "Since these aren't part of the Sony-MS bubble, it doesn't address the concerns we have about the effect on the Sony-MS bubble."
I think the regret would be in missing effects on the larger market due to overfocus on a sub-market.
Johna X
Boo
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I've seen some argue the phrasing of stopping cloud growth means they can never buy again, not sure (tbh wouldn't mind, I used to defend Microsoft buyouts cause I was tired of the "Microsoft killed Banjo-Threeie" conspiracy theories but that was from a dev creative perspective not a corporate capitalism perspective) but if so that's likely why they're fighting so hard, its not about just Activision. But it may be a total misinterpretation. I don't know who they should even buy at this point other then all the SEGA rumors that I personally just doubt, I feel like with the IP they own they have a very well rounded situation (I refuse to accept that they need ABK for Toys For Bob to scrimblo things up, no they aren't making a new Banjo someone else will if it's to happen at all)
I only like buyouts that prevent death, some beyond that are inevitable (tbf ABK stock was kinda bleeding prior to this but I still doubt they go bankrupt anytime soon) but like I don't wanna see them buy SEGA or Square or Ubisoft so honestly if true ok cool, but I think CMA may allow them to do like SEGA and the wording doesn't clarify its specifically cloud mixed with someone this size because of that being superfluous
I only like buyouts that prevent death, some beyond that are inevitable (tbf ABK stock was kinda bleeding prior to this but I still doubt they go bankrupt anytime soon) but like I don't wanna see them buy SEGA or Square or Ubisoft so honestly if true ok cool, but I think CMA may allow them to do like SEGA and the wording doesn't clarify its specifically cloud mixed with someone this size because of that being superfluous
That actually is what the CMA stated:
But from the perspective of "we don't big tech to get bigger", they'd succeed
As someone who disagrees with the CMA's assessment, it's always been clear from day one that they're more likely to block the merger. Anyone who says otherwise hasn't been paying attention to the proceedings.
Johna X
Boo
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I want the merger to be blocked but think the cloud excuse is silly and yet also don't care enough to want them to come up with a better reason, idk maybe makes me biased but idk
At least I'm not a PS5 owner so its not even about the games where people are most clearly biased
At least I'm not a PS5 owner so its not even about the games where people are most clearly biased
Would it really harm ps5 owners though? They would still get cod on day 1 so no change there.
I guess MS could theoretically make some of their other game's exclusive.
boodream
Paratroopa
Microsoft has been working patiently for 20 years and has never been afraid to lose money by entering the video game market, but it seems quite clear for a long time that their strategy is no longer to try to impose themselves as a manufacturer, but as a publisher, both of games and services. Taking heavily into account the cloud and the Game Pass, is relevant, it means to act that the stake to come is not only exclusivities on Xbox consoles, but the market share as a publisher.
They don't even have an interest in depriving Sony of Call Of Duty. 1), because selling tons of Call Of Duty on Playstation will be profitable as a publisher, just like very well selling Minecraft on Nintendo Switch is profitable for them and 2) because even the part of the commitments made on the services that might piss them off, namely not reserving all their games to Gamepass only, would not commit them ad vitam but only 10 years, in a market that is still being built.
They don't even have an interest in depriving Sony of Call Of Duty. 1), because selling tons of Call Of Duty on Playstation will be profitable as a publisher, just like very well selling Minecraft on Nintendo Switch is profitable for them and 2) because even the part of the commitments made on the services that might piss them off, namely not reserving all their games to Gamepass only, would not commit them ad vitam but only 10 years, in a market that is still being built.
What kind of effect, though? If a company owned, say, 51% of the whole market, it'd show up in a huge share of influence on at least one of the examined sub-markets. There might mistakes where, in dividing the market, one area of it is forgotten about and not captured in a sub-market. That would be a flaw in application, not with the approach in general.
Similarly, if a regulator hears out multiple industry representatives, that guards against a single entity pushing their unique framing onto the rest of them. You could still have malpractice on a case-specific basis, but the process itself doesn't have an apparent blind spot.
Of course. Dividing markets is perfectly reasonable if the specifics of a case support it.
I'm not sure what this has to do with what the poster said. This seems obvious enough.
Go back in the conversation. My initial question was: "What is the danger in erring on the side of making too fine distinctions in markets rather than lobbing too many into one market?"
To which one answer was the problem of letting one competitor in a market define it in their terms for all other competitors. The regulatory process is aware this would be a bad idea and there's measures in place to prevent it. As said before, I don't really care about the specifics, whether it be cloud or consoles, Call of Duty or Nintendo. So long as Microsoft was free to challenge Sony's view and the CMA heard out multiple, competing parties to inform their decision, I don't see the danger to this approach.
Ah, I understand now. There's nothing wrong with the process theoretically.
In practice, Microsoft giving Nintendo customers access to Call of Duty could be an example where a focus on a sub-market misses what is a benefit to customers in the whole market. Except it's an artificial measure done to get a merger approved in the first place and there's no evidence this result would occur naturally and beyond the 10-year-deal, after all if there was a sound business incentive to port Call of Duty to Nintendo platforms, why isn't Activision doing it already? We all here on the forum have our answer, I think, but it's not one that's bound to convince regulators.
Minor correction here: it's not bound to convince the CMA, specifically. Other regulators have found no console SLCs.
The tangible harm is being done to the cloud services whom MS made deals with. Boosteroid and the rest are now not getting Call of Duty. But it seems CMA wants to err on the side of caution, even at risk of blocking a nascent market from flourishing.
And frankly, there's nothing wrong with that. Video games will continue to exist without cloud gaming. This block, however, signals to companies that the first mover advantage might not be so advantageous, after all.
There's no evidence for anything that far into the future. 10 years is already an incredibly long time for a contract.
The business incentives of an Activision under Microsoft would differ, I'd think.
Hailinel
Musou Mania!
Anything discussing the state of the industry, or the multiple industries Microsoft is involved in, ten years down the line is going to be speculative. And like Sheldon said, there's nothing to suggest that the contract would be extended beyond that decade window.
Given how Microsoft has operated with the devs acquired in the past few years, there's little reason I'd personally believe that Microsoft would even pursue these COD platform pledges if the merger wasn't at stake. When their deals closed for companies like Zenimax and Double Fine, a few projects that were already multiplatform and promised for those other platforms like Ghostwire and Psychonauts 2 remained multiplatform. All other projects have since been made Xbox exclusive.
And if such agreements are part of a deal to ensure the merger goes through, who's responsible for ensuring Microsoft lives up to their end of the bargain, and how could they be punished for not doing so?
