Microsoft appeals UK watchdog's decision to block Activision acquisition

Microsoft's $69 billion takeover of Activision Blizzard was dealt a blow in April when UK's competition watchdog, Competition and Markets Authority (CMA), blocked the deal. Now, the tech giant has filed an appeal against the ruling to the Competition Appeal Tribunal (CAT) on grounds of "fundamental errors" in assessing Microsoft's cloud gaming services. To note, the EU approved the Microsoft-Activision agreement earlier this month.

CMA was worried that UK's cloud gaming market would be impacted. It claimed that Microsoft controls around 70% of the world's cloud gaming business and adding Activision to the mix would "reinforce Microsoft's advantage." CMA also found 'shortcomings' in the tech giant's deals with cloud-gaming rivals like Nintendo and NVIDIA, adding that the market could operate sans intervention if the merger was canceled.

Microsoft is appealing the CMA's decision on five grounds. It claims that the watchdog made "fundamental errors in its assessment of [Microsoft's] current position in cloud gaming services by failing to take account of constraints from native gaming." Microsoft also believes that CMA "erred in failing to take proper account of three long-term commercial agreements [Microsoft] entered into with cloud gaming providers."

Microsoft termed CMA's belief that Activision games would be available on cloud gaming services sans merger as "arrived at in an unfair manner." The tech company also rejected the notion that it "would have the ability to foreclose rival cloud gaming services by withholding access to Activision's gaming content" post-acquisition. Microsoft claims that CMA "erred in law" in its handling of the deal.

Appealing the CMA's decision at the CAT is expected to take a lot of time, possibly around nine months. Even if the appeal is successful, it will still be sent back to the CMA for review. Time is crucial for Microsoft and Activision.

So far, the Microsoft-Activision deal has been approved in 37 markets, including the EU, Japan, and Ukraine. The merger has also been greenlit in the world's biggest gaming market, China. Meanwhile, apart from the UK where the acquisition is pending approval, the deal is also facing hurdles from the US Federal Trade Commission. A hearing for the case is scheduled there on August 2.