Microsoft Activision Blizzard appeal: what happens next?
"Chances of the acquisition closing this year have dropped substantially."
Microsoft has said it will appeal today's shock decision by UK regulators to block its $68.7bn Activision Blizzard acquisition - but how will this work, and could it still be a success?
Appealing today's decision will be a lengthy process for Microsoft, and hamper any chance of the deal being approved globally for months - and that's without the separate decisions still due from the US Federal Trade Commission and the EU's European Commission, both of which are still scrutinising the deal for themselves.
"According to the Competition Appeal Tribunal site, straightforward cases are aimed to be dealt with within nine months," games industry analyst Piers Harding-Rolls told Eurogamer today. "If the appeal is successful it is then returned to the CMA to review. This again will take some time.
"I think the chances of the acquisition closing this year have dropped substantially. Next up is the EU decision on the deal towards the end of May and the FTC action at the beginning of August."
Could Microsoft's appeal be seen as a straightforward case? Considering the deep concern expressed by the CMA in its final report today over the deal's impact on the growth of cloud gaming, it seems unlikely the CMA would suddenly U-turn on its approach.
"The recent news that the CMA had narrowed its focus of concern to the cloud gaming market raised hopes that the deal would be approved, following Microsoft's suggested behavioural remedies and very public deals with cloud gaming companies," Harding-Rolls continued. "After all, streaming of games is still fairly nascent in the UK.
"This has not been the case. The CMA is more concerned about Microsoft's extent of cloud gaming capability across Azure, Windows and Xbox Cloud Gaming. The deals that Microsoft has done with the bring-your-own games cloud gaming services such as GeForce Now are not directly competitive to Game Pass. This has not been enough to convince the CMA that it would stop Microsoft dominating the cloud gaming market in the future."
Indeed, the CMA's report goes into detail over its concerns that Microsoft's existing ownership of Xbox, Windows and cloud infrastructure already gave the company dominance in the cloud gaming market. Being able to control franchises such as Call of Duty, Overwatch, and World of Warcraft with that existing advantage risked any further competition in this space, it stated.
It's also unclear how Microsoft could further appeal the issues the CMA raised, considering it already proposed remedies that did not go far enough. These largely comprised of promises to keep Call of Duty available on other platforms, and 10-year deals with other cloud gaming services. But the CMA remained unconvinced these would be enough.
Considering the rapid changes in the fledgling cloud gaming market, the CMA said any such deals and promises gave Microsoft too much wiggle room down the line. The CMA also decided it did not want to have to keep enforcing the decision over time - and that blocking the deal was the safer option.
Could Microsoft compel the CMA to accept it had simply chosen the easiest way out? Ultimately, any successful appeal would render the case back in front of the CMA for reappraisal.
"The appeal has a chance of success," Harding-Rolls concluded, "but the CMA wins a significant majority of the appeals that are made. If Microsoft wins, the case returns to the CMA for review."
Earlier today, Activision Blizzard boss Bobby Kotick insisted the CMA's decision was "far from the final word" on Microsoft deal becoming reality.