Ignore Microsoft’s whines about the Activision takeover. The CMA did its job
theguardian.com
theguardian.com
IMO the reason why this decision is really dumb is because the reason given was cloud gaming.
I think that people are missing this.
This isn't a market. Almost nobody plays on cloud gaming platforms, like Stadia which recently closed down, or similar.
The idea of blocking a deal because maybe this technology will become much more popular one day and maybe Microsoft will be the success is IMO dumb. It's just a dumb argument.
Concerns about CoD and PlayStation at least make sense, but not given here.
>The cloud allows UK gamers to avoid buying expensive gaming consoles and PCs and gives them much more flexibility and choice as to how they play.
https://www.gov.uk/government/news/microsoft-activision-deal...
YET they next sentence
>Allowing Microsoft to take such a strong position in the cloud gaming market just as it begins to grow rapidly would risk undermining the innovation that is crucial to the development of these opportunities.
Which is really funny considering the closure of Google Stadia, so maybe it was a 4D chess move by Google after all
If this is there definition of cloud gaming, how do phones come into play? They seem like a far bigger market that doesn't require additional hardware purchases specifically for gaming. You can hook them up to popular video game controllers & your TV. No latency issues, which Microsoft won't be fixing in cloud streaming type games without insane investments near users.
The article in the headline doesn't actually give any good reasons & I can't find any solid reasons by any of the people cheering on any Microsoft hate.
If you want to call Microsoft a monopoly & hate on them, there are tons of great & current examples but this just doesn't seem to be one. It's equivalent to blowing the whistle & calling a penalty on some random person for no reason because five plays earlier someone else on that team got away with one.
"Subscription" =/= "cloud"
They are not basing the block on some "maybe" future, but on current reality.
> Microsoft already accounts for an estimated 60-70% of global cloud gaming services and has other important strengths in cloud gaming from owning Xbox, the leading PC operating system (Windows) and a global cloud computing infrastructure (Azure and Xbox Cloud Gaming).
Microsoft already has a majority of the market. CMA asked Microsoft to provide guarantees they wouldn't abuse their position if they also owned Activision/Blizzard, and whatever guarantees Microsoft provides weren't enough to convince CMA.
> Microsoft’s proposal contained a number of significant shortcomings connected with the growing and fast-moving nature of cloud gaming services:
> It did not sufficiently cover different cloud gaming service business models, including multigame subscription services.
> It was not sufficiently open to providers who might wish to offer versions of games on PC operating systems other than Windows.
> It would standardise the terms and conditions on which games are available, as opposed to them being determined by the dynamism and creativity of competition in the market, as would be expected in the absence of the merger.
Basically, Microsoft tried to weasel their way through the merger so they can prevent other actors from competing with them on a level playing field. Exactly the kind of shit CMA should block.
The conclusion:
> Accepting Microsoft’s remedy would inevitably require some degree of regulatory oversight by the CMA. By contrast, preventing the merger would effectively allow market forces to continue to operate and shape the development of cloud gaming without this regulatory intervention.
Paraphrased: "Either we have to keep close track of them if merger is accepted, or we can just let companies compete in the market"
This is actually incredibly funny reading because Google Stadia was 100% worse than Xbox Cloud. You had to sub + pay for the game too. And some of them were exclusives too.
Compared to that how Gamepass works in tandem with Xbox Cloud (you can play on PC, Xbox, and streaming) is day and night YET it's still a problem
Plus I don't get the publisher part
>It was not sufficiently open to providers who might wish to offer versions of games on PC operating systems other than Windows.
Most of the Xbox Cloud games are multiplatform, and I don't just mean PC (Windows) and Xbox but Playstation and sometimes Linux or Mac too
You didn't. You just had to sub to get access to the "free" games + play at resolutions higher than 4K + other stuff. After you bought the game, you could just stream it at 1080p.
It's also incredibly irrelevant, Google is not the ones being investigated here, and Stadia has also been shut down so it's not relevant at all how much better or worse it is.
The question is not which platform is better or worse, but if Microsoft could potentially abuse their position if the merger goes through.
I recommend you to either read the final report (https://assets.publishing.service.gov.uk/media/644939aa529ed...) or the summary of the final report (https://assets.publishing.service.gov.uk/media/6448f377814c6...). Probably the summary is a bit easier to digest, as it's 20 pages rather than 418 pages, but it has all the information you need to understand the case, as most news sources don't go into much depth.
It's showing how much Google failed with Stadia, people still don't know how the service worked. You paid for the games to stream them, and optionally there was a subscription for better quality and free games. Also you could link Ubisoft+ to stream their games for "free", and there were free to play games.
And there were only time limited "exclusives", which were only indie games. Nothing to do with actual Xbox/PS only exclusives.
I thought this was a stupid understanding of graphical fidelity anyway, when render settings are probably gonna be more important than 1080p vs 4k (and we know some games were set to play at essentially medium graphics settings), and the video compression algorithms the games were being run through to stream them wrecked quality regardless of if you were playing in 4k or not.
In most cases a higher framerate or better bitrate would be a more improved experience than more pixels.
You didn't address the point of parent comment, which is, it's not really a market. It's trying to become a market, but so far is just a small niche where companies lose money.
One major difference between how the US and Europe views monopolies is that most of Europe tries to prevent even the formation of them (exceptions apply), while the US tries to prevent "dangerous" monopolies, while allowing monopolies themselves.
It could be useful to shift the perspective if you're used to the US one, when looking at decisions made by European agencies like the CMA.
Sure. On the other hand, it could be useful to listen to Microsoft's perspective on being obstructive to business rather than accusing them of "whining" given that Europe lags behind in technological innovation despite being similarly well educated.
True in some sense, like cool innovations like Ubers for X and social media. False in some sense that there been innovation coming from Europe as well, small things like the web, GSM, CRISPR, LHC, renewables and other almost irrelevant things.
I think technological innovations comes from all continents and I don't think you can surely say that one lags behind another when considering innovation with big impact, everyone is contributing in their way and some in some fields while lagging in others.
But since I already shared that with you, here are some companies doing interesting "disruptive" stuff, which seems more interesting to you:
- Vertical farming -> Infarm (Germany), Agricool (France)
- Electric mobility -> Northvolt (Sweden)
- Quantum computing -> IQM (Finland), Pasqal (France)
- Biotechnology and synthetic biology -> Oxford Nanopore Technologies (UK), Synthace (UK)
- Renewable energy -> Vestas (Denmark), Oxford PV (UK)
While writing all of this out, I'm starting to think that maybe you're just trolling, as obviously there is technological innovation coming from all continents and someone can't be so thick to think it all comes from the US, right?
As you mentioned, Europe has biotech and the US has biotech. So why did Moderna come from the US rather than the Europe? Same for EVs and social media. Rather than use home grown messenger apps like KaoKaoTalk and Line, they use Whatsapp, which isn't even widely used in the US. Could it be that Microsoft is correct that businesses are burdened by regulation? I honestly can't say, but it's definitely worth analyzing rather than dismissing this criticism as "whining". That's the trolling that you should be concerned about rather than comments on the Internet.
It does not.
It says that Microsoft plans on using extremely popular content to boost their cloud platform. Not even Microsoft is denying that:
> Microsoft submitted that, given the five-year period captured by the LTV, any incremental growth of Game Pass is being captured in the LTV calculation.
And they admit that they will be doing it, so they will capture more cloud gaming market and eventually increase profits:
> On the other hand, CoD’s addition to Game Pass may cannibalise some of the B2P sales of CoD. In its valuation model, Microsoft estimated this cannibalisation to be []%, [].617 The fact that Microsoft is nonetheless adopting this strategy suggests that it expects it to be profitable in the long run. This would also apply to overall revenue from customers switching from PlayStation to Xbox.
If you have Game Pass, would you use its cloud gaming service, or would you go out of your way and play in Luna, which by the way, does not have as many games?
Also, Amazon does not have the software platform, nor the hardware, to compete with Microsoft (Windows, Xbox).
Microsoft could and does bundle a Xbox app in Windows, which also features their cloud platform very prominently [0].
Essentially, every single Windows user is being introduced to Microsoft's very own cloud platform. It's not that Microsoft is "treated differently", they are indeed different.
I have both prime and game pass ultimate and use neither bc honestly cloud gaming sucks, even with google fiber.
But you have. Inadvertently, but you did.
I think you don't understand Microsoft's idea of vertically integrating your gaming experience, and it isn't even a new concept for them, as they have been doing it with pretty much every single market they have got into, e.g. Office, Internet Explorer.
Microsoft bundled cloud gaming inside their subscription, because that's how they target users who want to play games. Same goes to the fact that they very prominently provide access to their cloud gaming service from their two gaming platforms, Xbox and Windows.
It is fair to say that people with a cloud gaming subscription from Microsoft are, in fact, gamers.
In comparison, Amazon bundles several services in Prime. I didn't even know I had free access to some Luna games. The other day I found out that I could stream some free music as well. I don't agree with their model either, but I bet that the vast majority of Prime members aren't paying Amazon just to have free access to Luna.
Their point is that cloud gaming is likely way less than 1%, maybe even 0.01% of any gaming activity. The cloud gaming experience still isn't 100% there in terms of latency, so it only makes sense to play single player games, and then most people who have an xbox just use their existing hardware rather than pay Microsoft to play it remotely.
What Microsoft is dominating is the market for game subscription services and they, as part of the industry, are not clearly articulating what it is, partly to ride along with the bullshit (When VR and AR got replaced with XR I'm sure that Dilbert's boss was asking "What's our XR strategy?")
It's not streaming gaming.
I have access to xCloud. The lag is unreal. I don't see how they will get the lag down to an acceptable level for the kinds of games that Activision makes.
Cloud gaming makes sense for party games, turn-based games, anything that doesn't require reflexes. This leaves out everything Activision makes.
There is no evidence that the lag issues with cloud gaming are solvable.
The experience is terrible.
MS only has that position because it is thrown in as part of Xbox Game Pass. No one is buying it on their own.
I have it as part of Game Pass. It's terrible. I never use it, outside of once or twice a year to verify it still sucks.
I am not convinced that cloud gaming is anywhere near being a thing. We could be talking several decades away before they figure out a way to get lag under control.
That is an implementation issue. I was on Stadia (r.i.p.) and the experience was superior to consoles: pure plug and play with no slow software updates getting in the way of gaming.
No amount of delivery tech is going to make up for the infrastructure being unfit for purpose in so many areas.
And, as you say, a lot of people don't have access to high-quality internet, and there is no reason to believe they will any time soon.
But I have gigabit internet (and before I got that, had 300 Mb/s) and played with a wired connection, so that’s likely a contributor to my positive experience.
And anyway, who elected Microsoft?
citizen: I want to paint my house blue
mayor: I unilaterally forbid you from doing that, on the grounds that blue houses look unsightly
citizen: that's undemocratic!
mayor: who elected you to decide painting your house blue?
I'm not claiming that microsoft should be allowed to do the merger on the basis that individuals can choose to paint their house blue, only pointing out that "microsoft isn't elected either" isn't a valid rebuttal to the objection that unilateral decisions by unelected bureaucrats are undemocratic.
The thing is that the CMA is appointed by the government, which is elected.
It’s like complaining about a speeding ticket because the cop wasn’t elected.
Those rules are not the same as those for individuals.
That is precisely what it means to say that one person, with a certain amount of resources, can do things that a group of people, with the same amount of pooled resources, is forbidden from doing.
Lord Templeman, law lord, in Hazell v Hammersmith and Fulham summarized the law thusly:
> That report[Case of Sutton's Hospital], although largely incomprehensible in 1990, has been accepted as "express authority" that at common law it is an incident to a corporation to use its common seal for the purpose of binding itself to anything which a natural person could bind himself and to deal with its property as a natural person might deal with his own
Microsoft is complaining that the mayor, in their example, was not elected.
It's a market. Google bungling Stadia doesn't make it any less of a market, or we wouldn't be seeing Microsoft, Nvidia and Amazon (to a much lesser extent) pouring money into it.
Regardless of your bubble, lots of people use cloud gaming services. There is no way to have concrete numbers, but the Stadia subreddit still has 110k subscribers months after the service shut down. That's not "almost nobody" on the dead service.
> 110k subscribers months after the service shut down. That's not "almost nobody" on the dead service
It is approximately close to zero. Especially considering that subscribers != active users (not even close).
So let's say 250k cloud gaming, meanwhile "gaming" as a whole is like bilions of users
Thus this Cloud gaming is basically non-existent.
Only Xbox Cloud Gaming reportedly had 10+ million users in 2022; meanwhile GeForce Now reportedly had 20+ million in 2022.
I do not get the hate/dismissiveness coming out of a position of total lack of even the faintest idea about cloud gaming.
How many of those 110k reddit users are/were actual Stadia subscribers though?
Just because someone subscribes to a subreddit, doesn't mean they are now, or were ever subscribed to the actual product.
Normally we have to let lies and bullshit from corporations wash over us, all we can do is complain on forums and still have to argue with Kool Aid drinkers.
If bullshit over cloud gaming meant Microsoft couldn't get what they wanted then it is payback... Sometimes you gotta learn that actions have consequences.
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Also there is a huge amount of confusion about what "cloud" means. For instance most of Adobe Creative "Cloud" is a set of desktop applications with limited cloud integration. What is has in common with with real cloud products (Salesforce.com, Figma) is that you pay for it with a monthly subscription.
Microsoft would love to just get your money month after month so you can play Assassin's Creed Episode 4215 and Call of Duty: Battle of Bakhmut and they don't care if you as a consumer know what kind of hardware it is running on but you'd better be sure the bean counters are aware that they could sell a "gaming PC" equivalent cloud instance to somebody in Azure for a dollar an hour so the economics can't possibly add up. Yet the cloud gaming bullshit still keeps rolling, at the last keynote NVIDIA's CEO was saying kids might game from the back seat of a car but what phone company is going to invest the last 800% of costs to get cell phone coverage in the last 20% of places?
Steam is still pretty much undisputed leader in today's games marketplace and it's a very comfortable position worth billions of dollars. And that's just on one platform.
NVIDIA likes it because it could justify higher prices for graphics cards. Suppose somebody plays 2 hours a game a day and they can justify an $1800 graphics card for that. (Over 3 years it's about $1 an hour, I'd compare that to about $0.45 an hour for the cheapest Azure instance with a less capable GPU)
22 hours a day the card is doing nothing, if other people were gaming on it and it were training neural network models the rest of the time the card could be worth $21,600. It's a throwback to IBM mainframes at the worst but NVIDIA could easily conclude it can't afford to sell 40-series cards to gamers.
I'd rather either bring a Switch while traveling or just play a game on my phone or iPad.
I can't believe the deal might fall apart because Microsoft has a "dominant" position in basically a non-existent market that there is no evidence will ever become a market. There are cloud games that work well. If the deal falls apart over this, and not the actual concerns about MS owning huge IP, this regulation is truly broken.
These are not the kinds of games that people buy PlayStations and Xboxes for. Jackbox party games? Sure. Awesome in the cloud. A turn-based strategy or RPG? Why not. Anything that requires reflexes? Not happening.
Microsoft believes in cloud gaming, and regulators have been caught with their pants down by thinking they knew better than industry. Repeatedly.
Is there a country where the organization ruling about competition cases is elected directly?
Is it really "trash talk" if it's 100% true?
> The idea of blocking a deal because maybe this technology will become much more popular one day and maybe Microsoft will be the success is IMO dumb. It's just a dumb argument.
You have to realize that these unelected bureaucrats have to justify their pension funds and headcounts. They NEED to block something so they can brag they "protected" the UK against some "monopolistic evil foreing tech giant".
If you can't innovate... Regulate!
> In relation to cloud gaming services, Microsoft has a combination of assets that we consider is difficult for other cloud gaming service providers to match. By owning Windows, the OS for which the vast majority of PC games are designed, Microsoft could stream games from Windows servers without having to pay a Windows licensing fee or adapt games designed for Windows to an alternative OS. By having Xbox Cloud Gaming and Azure, Microsoft has both a short-term and a longer-term solution to host cloud gaming, leveraging its large and well distributed global cloud infrastructure to stream its games without having to pay a fee to third-party cloud platforms. And by having an existing console ecosystem, Microsoft has a range of popular games that it can offer. As such, we consider that Microsoft has a strong position in cloud gaming services and will remain an important competitor as the market expands and evolves.
Essentially, they have a larger foothold in cloud gaming than any other competitor, and by controlling the software and some of the most popular platforms for gaming, they have a vast advantage over other opponents to the merger, e.g. Sony.
Which makes sense. While I don't expect cloud gaming to overtake traditional local gaming in the short term, allowing Microsoft to buy some of the most popular franchises out there and the largest US publisher, may create an artificial behemoth in the field, impossible to overcome.
I was thinking about how silly it was that they were worried about a “monopoly” on a market that doesn’t even really exist and most of my opinion was formed by both my usual prejudice about ignorant government officials and listening to Ben Thompson’s take (Stratechery).
I didn’t even think about the Windows or Azure angle since I don’t use either.
They've extrapolated past experiences in the industry to understand what is likely to happen in the future. Microsoft buying large publishers won't mean some tidal wave of others wanting to push Linux instead, it would be a securing of Windows/Xbox. Microsoft would also likely pull their games from Steam, why bother when you own two publishing storefronts. There goes more games.
Valve is correct in hedging their bets against Microsoft because their entire ecosystem still relies on Windows continued tolerance (and incompetence) towards them. However studios and most publishers have zero reason to care, they go where the most users are and therefore wouldn't join some hypothetical hedge against Windows.
Microsoft is showing its most unprofessional and belligerent face going back to the worst times of the company. Remember the FUDs about Linux, the lies about DR-DOS, ... Microsoft is back and needs to be corrected.
His remarks the other day are going to age terribly. He's basically everything Ballmer was but as a lawyer.
But, we should expect more of this if mega corporations are allowed to continue growing their market caps beyond the GDP of G7 nation states.
...which is a pointless comparison because the two things being compared are different units entirely. The former is basically the lifetime value with discounting applied, whereas the latter is income from a single year.
Only if you are a child. One thing is that Microsoft leadership does not like the situation the other one is to insult the UK and lash out. That is a sign of entitlement and a very destructive way of looking at the rule of law.
They make other bizarre claims like apparently everyone that subscribes to xbox game pass does so for cloud gaming. Cloud gaming isn't even offered in most markets. There is no way people are subscribing to game pass for cloud gaming, its not even good.
Its obvious to anyone with a brain that peer-to-peer is the way forward with game streaming because it solves the latency problems.
This is because input latency goes down if you run at a higher framerate. Nvidia worked on this and published some data on it. It's real.
>They make other bizarre claims like apparently everyone that subscribes to xbox game pass does so for cloud gaming.
Gamepass includes Xcloud. Not sure what your point is. CMA made a true statement.
I'm sorry but no, this not correct. XCloud is not available in most markets that Gamepass is present.
"With an estimated 60-70% market share in global cloud gaming services, it is already much stronger than its rivals"
GLOBAL.
https://assets.publishing.service.gov.uk/media/644939aa529ed...
No, it's not. This is the actual quote from the report:
> In terms of latency, some providers noted that they have already successfully streamed graphically complex games, such as CoD, with good results in terms of gameplay.
Which is accurate, e.g. Doom Eternal.
> XCloud is not available in most markets that Gamepass is present.
It's available in the UK, which is the domain of the CMA. Any other country is irrelevant to the discussion.
> In relation to cloud gaming services, we found that Microsoft already has a strong position. It owns a popular gaming platform (Xbox and a large portfolio of games), the leading PC operating system (Windows), and a global cloud computing infrastructure (Azure and Xbox Cloud Gaming), giving it important advantages in running a cloud gaming service. With an estimated 60-70% market share in global cloud gaming services, it is already much stronger than its rivals.
The CMA operates in the UK.
Both statements are true, yet you are suggesting that together they are not?
Also, could you name a single cloud gaming company holding a larger market share in the UK, than Microsoft?
How would this work exactly?
Given that it wasn't even the UK government who made the call here that probably won't achieve much. Would the UK government really change the fundamental rules of the game to override the CMA just because the regulator did its job? Doesn't seem likely. Literally all of the commentary I've seen about this from any source not connected to Microsoft or Activision is taking the view that it was the right call by the regulator.
Effectively, CMA is dreaming a future where cloud gaming has taken over. It is passing a judgement based on where the industry could go, rather than where it is now. This allows a bureaucratic organizations to impede companies based on arbitrary & unsubstantiated fears.
All the cloud gaming predictions haven't happened. Mobile gaming hasn't killed traditional gaming either.
In fact, it turns out that all those precautions were largely wrong. There is a huge market for high-quality games you play on local hardware for maximum visual and input fidelity.
I too find it very dangerous for government regulators to be predicting a future that industry can't themselves predict. They are not experts on this industry and don't conduct user and market research. They are literally just guessing.
It is equally likely that cloud gaming never becomes a thing because phones keep getting more powerful and eventually they take the place of the future that cloud gaming was supposed to represent. Apple could eventually allow you to hook/locally stream an iPhone to a TV to use it as a console.
There will always be a market for hardcore hardware like consoles and PCs, but who is to say that the more casual option will be cloud gaming and not some world in which mobile devices can be used as less-powerful home gaming machines?
Seems disingenuous that MS wouldn’t leverage their monopoly on client/game OS into the cloud as well. It at least doesn’t seem arbitrary and unsubstantiated. And prevention is better than reaction in many cases.
If the UK proceeds with a mandatory breakup of Sony's holdings, I would then approve of how they're regulating the market.
If they, however, allow one titan to build an unstoppable first-party monopoly but bar only some of the competition from catching up, then I have serious concerns and misgivings with the misguided protection of the existing #1 business.
Microsoft buying Activision-Blizzard would create the second largest gaming company in the world by revenue.
In comparison, Sony's largest acquisition was Bungie, which was 30x smaller than Activision-Blizzard.
Also, the ruling specifically addresses cloud gaming, not consoles.
As an aside, it is interesting to see how this merger is received in the tech space vs gaming space. Most folks in gaming seem to welcome the merger because Activision has long been anti-consumer / bad stewards of game franchises, and many people feel positive about the direction of the Xbox division as of late.
I also think the CMAs rationale for their decision is bizarre and shows a lack of understanding of the space. I can’t help but feel much of European tech regulation is about feeling out of the loop on tech and a certain fear of falling even further behind the United States and Asia.
Wouldn't they need to cease all Microsoft activities in the UK? It's not some Microsoft Gaming Corporation that wants to buy Activision-Blizzard, it's Microsoft Corporation.
It is a challenge for Microsoft, but honestly I don’t know how much sway the CMA has here. They don’t have a ton of leverage to block the deal if every other country is onboard. My guess is they will ask for some specific concessions.
1. Appeal
2. Withdraw from the UK market and force the issue politically. Microsoft can eat the loss of the UK market for a long while if they want while forcing UK politicians to answer constituent questions why Microsoft/Activision games are banned in the country.
Does they have to?
I guess they can have separate entity (or a reseller) to import those software and sell them in UK.
Compemt of courts is no joke
They blocked the acquisition on a premise that cloud gaming will be huge in the future and that Microsoft might make Activision Blizzard games exclusive to their Xbox Cloud. Taking in consideration Microsoft's enormous comparative advantages like owning Xbox, Xbox Cloud, Game Pass, Windows, Microsoft Azure plus lots of gaming franchises, this block somewhat makes sense.
But what worries me the most is Zenimax acquisition that gave Microsoft some of the most iconic gaming franchises of all time (Doom, Quake, Wolfenstein, Fallout, Elder Scrolls) and the reality is that most likely these franchises will never see a day of light on any other cloud gaming platform except Xbox Cloud.
I can't believe that Zenimax and Bethesda gave in and sold out to the Microsoft despite thriving on their own.
CMA and FTC should've blocked Zenimax acquisition first which would then discourage Microsoft from attempting to acquire Activision Blizzard. But that unfortunately didn't happen, quite the opposite Microsoft grew even more greedier after acquiring Zenimax.
Cloud gaming has a lot of competition and they all are companies with deep pockets: Microsoft, Sony, Nvidia, Google, Amazon. They can afford to do what Microsoft is doing if they so choose. This isn’t some new paradigm. This is how this business is run. If it is not console exclusives it is platform exclusives. It is the only real differentiator.
The same way they "controlled" the smartphone market with Windows Mobile in the pre iPhone/Android days?
It's an entirely new market. 60-70% of all current users is an insignificant proportion of all potential users so it doesen't mean much. And well it's not their fault that they other megacorps like Google are so incompetent.
Do you know somebody nobody else outside MS does? Cause that doesen't seem at all likely to me.
I looked at some of the most recent games released or to be released by Microsoft, like:
Grounded
- Age of Empires IV
- Forza Horizon 5
- Halo Infinite
- Psychonauts 2
- Minecraft Legends
- Ara: History Untold
Guess what, every single one of them is available on Steam.
And this time: that's already the case for Activision Blizzard. They are not available on any cloud gaming service, by design. They were cease-and-desist-ed off NVIDIA's GeForce NOW and the EULA directly forbids running on cloud gaming services or devices.
They tend to look far further into the future and are very much risk averse since they know that their powers are diminished when it comes to managing monopolies than preventing them emerging in the first place.
Yes Cloud Gaming and GAAS is very much a meme still but what about 10 or 20 years down the line?
Microsoft currently owns 70% of that market through the Xbox Pass.
They are also the 2nd largest CSP which means they have the tech and infrastructure to deliver these services anywhere without being dependent on any one.
With this deal they’ll also become true 3rd largest publisher and by sheer IP clout possibly even the biggest.
The argument that the CMA makes is basically that they already have a massive first mover advantage and unlikes the likes of Sony, Valve and Epic they also have their own cloud infrastructure to deliver these services without having to make deals with anyone else. If they’ll also have a massive library of IP and titles that would give them even a larger advantage over other competitors.
The logic behind the CMA’s decision is that this would give Microsoft a natural monopoly in cloud gaming which is hard to argue against. Arguing that it might not be that important is possible but it’s an argument that is very hard to actually back up with any substance since it’s all hypothetical.
Google has their own infrastructure and Nvidia has their own as well. I assume Amazon has their own for Luna as well.
And let’s not kid ourselves, no one is subscribing to Gamepass for cloud streaming. It just happens to be bundled in, so the argument that they have a monopoly is a bit of a farce.
Google doesn’t have a major gaming brand like Xbox and doesn’t own any publishers - Microsoft has Microsoft Studios and Zenimax already.
NVIDIA same thing they have the hardware business on their side but they don’t have a cloud like Azure, GCP or AWS nor do they have gaming IP in their pocket.
Again the issue is you are looking at this problem from the perspective of today and by taking into account only individual elements.
What the CMA is looking at is Xbox Brand + 70% of the current market + 2nd largest CSP with datacenters all over the globe and the ability to share the cost across other profitable offerings + Being the 3rd largest publisher and owning a fuck ton of gaming IP.
Now extrapolate 5, 10 and 20 years down from that staring point.
And remember you can always make an argument what if Google or NVIDIA invest every last cent they have to give Microsoft a run for their money but you can also make a counter argument what if Microsoft does the same.
In that case Microsoft still is in a far better position because of their current position in the market.
But when you extrapolate more realistically based on existing business models and ventures as well as the actual cost of developing these services further Microsoft is in a very strong position already and possibly the strongest of all players. Making them even stronger is exactly what regulators like the CMA are here to prevent.
The point that the CMA made is that the combined advantages that Microsoft has already with this acquisition will position it well ahead of the competition to the point where it will get a natural monopoly. Natural monopolies are still monopolies even if no one else right now wants to compete.
This is literally what regulators like the CMA are here for.
Ah, I remember this one.
> No one likes Windows better than any other OS, it just happens to be bundled with almost 99% of the computers sold out there.
> No one wants Word over Wordperfect, it just happens to be bundled in the Office suite, and that happens to be installed along Windows in many new PCs.
> No one likes Internet Explorer, it has a 90% market share just because it comes bundled with Windows.
And so on and so forth.
Extend, embrace, extinguish.
Xbox Game Pass is $10.
Xbox Game Pass Ultimate -- which includes both -- is $15. That's the tier that also has cloud gaming.
Not only is it $20 vs $15, I doubt the account system would let you subscribe to both separately instead of Ultimate.
In addition, consider that Ultimate is available anywhere both Game Pass and "Gold" are available, even where cloud gaming is not. I'm subscribed to Xbox Game Pass Ultimate in Israel, except cloud gaming is not offered here (and not even as "ping may be higher than optimal", it's not even in the UI unless I VPN).
If someone's counting Ultimate subscriptions as "cloud gaming subscriptions", they would be heavily inflated from "cheaper bundle" users and users from countries where cloud gaming isn't even available.
The report states that Xcloud is available in a handful of countries, and compares it to its rivals, but the point they make is about available content, which concerns the acquisition.
In other words, even if Microsoft accounted for 60 or 50% of the global cloud gaming numbers, CMA foresees a scenario where they use an extremely popular franchise to increase the value of their offering, while decreasing the attractiveness of their competitors. They also back it with some numbers that suggest that CoD could drive platform adoption up.
> Our survey asked CoD gamers on PlayStation to think about the time when they bought their most recent PlayStation. The survey asked what they would have done if the most recent CoD game they owned at that time had not been available on PlayStation, but had been available on Xbox and PC.
> Results indicated that 24% of respondents would have bought an Xbox, a PC, or no gaming device at all instead of a PlayStation.
Yes, my big hope here is selfishly that Microsoft is able to salvage what's left of Blizzard and Microsoft has been the most consumer friendly of the big 3 this last couple of generations.
and the shareholders would want the current board out
not to mention the complete total global reputational damage of ignoring a G7 country's competition regulator
Now any threats that they make are probably just bluffs, but there's no way that senior staff of a defunct division would be arrested for something done by their former company, and the idea that there'd be any extraditions going on seems unbelievably far fetched to me.
Brexit or not the UK still has a lot of soft power, it’s still a G7 member and a large economy.
Other countries won’t look too kindly on a corporation ignoring a major and very well respected regulator even if their interests aren’t impacted by that particular decision.
The rule of law is something countries fight to preserve and it’s very much a collective thing.
If microsoft decided to no longer do business in the UK (not happening - it's a bluff) it would not be beholden to their decision.
It would be a different situation if either company was based in the UK, but that's not the case.
There is a very big difference between that and seeking permission and being told no and then acting like a 5 year old which is what Microsoft and Activision are doing.
You mean like what they did with Halo? That worked out alright.
"The chair of the CMA, its chief executive and the rest of the board are appointed by the business secretary of the elected government" if I'm reading this correctly, UK citizens elect a government, the government appoints a business secretary, and then the business secretary appoints the entire CMA? So that would be two layers of disconnect from the voter.
AFAIK most US agencies are similarly disconnected or worse.
Whether "unelected" is a meaningful criticism to level at government systems is a separate question though. I feel like most roles are not ones where the voter could realistically have enough knowledge or education to actually make good decisions about who to appoint to roles with obscure or complex mandates. We seem to take democracy as an absolute good in all cases sometimes even though uninformed decisions can have catastrophic effects.
EDIT: I really shouldn't have to clarify this but apparently we're at the point where "this article poorly argues its thesis" is interpreted by some readers as "I love monopolies and/or activision"? So to be explicit: I think we need more antitrust enforcement, not less, but the article seems to make this case in a clumsy if not deceptive way
You should see the European Commission.
Masses of common people are fundamentally unprepared for voting and compromising on important and complex legislation. That's why (supposedly expert) agencies and lawmakers exist, to handle that with some higher level goals and objectives and strategic thinking.
Well direct democracy for everything is a consistent position but I doubt that Microsoft unironically thinks that all appointed government posts are unaccountable.
The business secretary would typically be an elected as a member of parliament (MP, equivalent to a congress person). The leader of the majority party in parliament will form a government, mostly appointing elected MPs to government roles. So the business secretary has been elected, but not as business secretary.
This is ignoring the absurdly anachronistic House of Lords, the upper chamber of parliament, who are mostly life appointments by various governments over the years (but also includes some hereditary peers, and an assortment of senior Church of England bishops). Lords can also be appointed to ministerial positions, although typically not the biggest jobs.
Don't get me wrong, I think Brexit was a monumentally stupid thing to do but it's was so far from relevant here that anyone invoking it was clutching.
Not allowing two big companies (is this the biggest merger ever?) join together for any reason that is in any way detrimental to the populace is clearly a good thing and within a government's remit.
I'm not sure why people are piling on so much scorn and derision against CMA.
Let me be abundantly clear: the decision is utter nonsense. I’m not going into the details here, but the decision is an abysmal abomination and should be very concerning to all technology businesses, both because it signals that a relevant regulatory body is willing to make arbitrary and horribly-justified decisions with major material impacts, and because a story is emerging about the international regulatory collusion that drove this. It ABSOLUTELY IS an undemocratic power grab from politically-driven regulators that abrogates their core duties in favor of empowering themselves and their own political factions.
Additionally, it’s extra embarrassing for the UK because it signals an overly cozy relationship with Sony (which has more operations / employees in country) that reeks of regulatory capture by a local lobby. That and a willingness to jump through hoops for an ambitiously activist US FTC. Unfortunately, the net result is the UK coming off as a complete joke. I’m strongly advising clients to avoid expanding operations in the country and to genuinely consider abandoning the market.
Take it or leave it, but I write this all as someone who had otherwise been strongly arguing AGAINST the deal, because I think it’s bad for the games industry. But this kind of sloppy and arbitrary behavior from regulators is even worse, for all gaming and tech businesses… and, to some degree, for all business in general.
Edit- I can’t elaborate on my reasoning here, but the full picture is out there for anyone interested in looking into it. This is a long and thorough rundown of the situation that serves as a good starting point: https://naavik.co/digest/microsoft-activision-blizzard-timel...
Microsoft is just throwing a tantrum over the CMA in the UK having a backbone to see for what Microsoft really is doing and this horizontal integration of existing multi-billion dollar franchises is bad for gamers. Even the UK Government isn't buying into Microsoft's bullshit of bringing title like Call of Duty to Nintendo Switch just to close the deal. [0]
Microsoft hasn't changed their anti-competitive behaviour. The methods are different but the strategy is the same, which they have gotten very clever over the decades.
[0] https://arstechnica.com/gaming/2023/04/uk-government-says-th...
And the biggest evidence of that is that MS still uses their monopoly to step over Linux and other OSes at every chance:
> We found that the Microsoft Cloud Remedy had several shortcomings: [..] Microsoft would not have to supply Activision’s full range of games to providers that may decide to operate using a non-Windows PC operating system (eg Linux)
They literally would only allow competitors to gain access to Activision's catalogue if they promised to use it with Windows and only Windows. I'm sure Be and others are having flashbacks. I am, at least.
And the worst part is that the EC would have very likely bent over and accepted this. Now I will never know, since the UK rejecting it makes it toxic.
Microsoft looks like a giant in gaming when including PC gaming but there Valve takes most the distribution money.
[1]https://www.theverge.com/2022/12/22/23523576/microsoft-three...
Using what one could only qualify as an utility from a competitor, does not make Sony any less right. Apple uses Google Cloud, Netflix runs on AWS.
> ... the UK that agrees with Sony yet we all know they're just afraid that all the Activision players would leave their platform
Yes, because the platform is not Azure, is Windows and by extension, Xbox.