Microsoft vs. UK Regulator over Activision Deal
Microsoft (NASDAQ: MSFT) took a swing at the UK's anti-trust watchdog, the Competition and Markets Authority (CMA), on Tuesday, branding it as a global "outlier" for putting a stopper on its ambitious $69 billion acquisition of Activision Blizzard (NASDAQ: ATVI), the creators of the popular "Call of Duty" series.
CMA's Decision Sparks Controversy
The CMA blocked the merger in April, citing potential harm to the budding cloud gaming market, leading to an intense dispute. Microsoft's pushback against the decision is expected to be deliberated in late July, as indicated by a judge at the Competition Appeal Tribunal (CAT) on Tuesday.
The Clock Ticking on the Merger
Daniel Beard, Microsoft's attorney, voiced his concerns to the CAT, warning that delays could jeopardize the completion of the merger. According to Beard, the deal's speedy execution is crucial to avoid undermining this significant agreement.
Microsoft Disputes CMA's Conclusions
Microsoft contends that the CMA made an error in presuming the deal would significantly undermine competition in the UK's cloud gaming sector. Beard pointed out that ten other regulators, including the European Union's competition authority, had already approved the merger earlier this month.
The Uncertainty Risking the Deal
Beard highlighted that the CMA's stance is the outlier, creating an atmosphere of uncertainty that threatens to derail the deal. He stressed the need for swift action to alleviate this uncertainty surrounding a small fraction of the global gaming industry.
US FTC Faces Appeal from Microsoft
Adding to the controversy, Microsoft also appealed against the US Federal Trade Commission's (FTC) move to halt the deal, disputing the agency's claim that the merger would stifle competition.
Activision Seeks to Intervene in Appeal
On a related note, Activision Blizzard seeks to intervene in Microsoft's appeal against the CMA's decision, reminding that the planned deal has a looming deadline of July 18.
Cloud Gaming vs. Native Gaming - The Ongoing Debate
Activision Blizzard's attorney, Anthony Grabiner, criticized the CMA's classification of cloud gaming as a distinct market from native gaming, wherein gamers download games or use physical discs to access them on their devices. Grabiner states cloud gaming is a different delivery mechanism and should not be considered a separate market. He emphasized the case's significance from a UK business perspective, indicating it's a matter of paramount importance.
