Microsoft says the CMA was wrong to block the merger for these five reasons

Microsoft has filed an appeal asking UK appeal courts to overturn the Competition and Markets Authority's decision to block the Microsoft-Activision merger.

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As promised, Microsoft has recently filed an appeal with the Competition Appeals Tribunal in an attempt to thwart the CMA's merger block. Microsoft's legal counsel has listed five reasons why the block was unjustified, but one that may carry the most weight is that the CMA "made fundamental errors in its assessment" of Xbox's current place in the cloud gaming segment. The CMA had found that Xbox's xCloud game streaming had 60% of cloud gaming MAUs in 2022, a number that has been contested.

Microsoft lists other grounds to challenge the decision, including the fact that the CMA "failed to take proper account" of its 10-year licensing deals with cloud game service competitors like NVIDIA's GeForce Now and Boosteroid, both of which will receive free access to Activision-Blizzard games if the merger goes through. It's also worth mentioning that these deals pose no real threat to Microsoft due to the business models associated with GeForce Now and Boosteroid, and the deals are probably something that the company had always planned to do.

Ground 3 is particularly interesting. Microsoft says the CMA's believe that Activision-Blizzard would eventually bring its games to cloud services is "irrational," however the publisher wouldn't lose any thing if it offered its titles to the aforementioned bring-your-own-game streaming services. It's not a stretch to see that Activision could bring its games to such a business model in the effort of expanding full game sales and monetization.

The other grounds talk about value of services and how the CMA dealt with Microsoft in relation to its cloud remedies. Microsoft says that the CMA wanted an all-in-one, wide-sweeping and comprehensive remedy that addresses key concerns, and was not all that interested in a "range of remedies." Oddly enough, the proposed Microsoft Cloud Remedy satisfied European regulators at the European Commission, who have approved the merger with specific conditions.

Microsoft counsel is asking the Competition Appeals Tribunal to overturn the CMA's decision and to force the CMA to pay for application fees. If Microsoft successfully convinces the CAT to overturn the decision, the merger will be kicked back over to the CMA for further analysis.

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