Microsoft Sets Ground for Activision Appeal Against UK Regulator

Microsoft is challenging a UK decision to block its $69 billion acquisition of “Call of Duty” maker Activision Blizzard on the grounds of “fundamental flaws” in the valuation of Microsoft’s cloud gaming services.

Britain’s anti-trust regulator, the Competition and Markets Authority (CMA), vetoed the deal in April, saying it could harm competition in the nascent cloud gaming market, sparking a furious row.

Microsoft confirmed on Wednesday that it had filed an appeal against the UK’s Competition Appeal Tribunal (CAT) decision, and published a summary of its arguments on Friday.

It misconstrued the CMA’s conclusion to significantly reduce competition in the United Kingdom cloud gaming market, according to the summary.

The CMA “made fundamental errors in its calculations and evaluations of market share data for cloud gaming services, taking into account constraints from native gaming (wherein gamers access games installed on their devices via digital downloads or physical discs)” failed”, Microsoft will say at the Competition Appeal Tribunal.

Setting out five grounds for the total appeal, it also said it would challenge the CMA’s understanding of the cloud gaming market and the impact of the deal.

Appeals against CMA decisions are heard by the Competition Appeal Tribunal, which decides on the merits of the decision, and is not an opportunity for Microsoft to submit new remedies.

EU competition authorities approved the deal earlier this month after they accepted the measures proposed by Microsoft, which were roughly equivalent to those proposed in Britain.

Microsoft has also appealed US Federal Trade Commission action seeking to block the deal on the grounds, the agency said, that it would stifle competition.

The CMA reiterated its position on Friday with a spokesperson: “We restricted this deal because we had concerns that it would reduce innovation and choice in the cloud gaming market in the UK. We will defend our position in court.”