Microsoft's acquisition of Activison Blizzard

[AshHunter216]

It looks like the loons on Reee and Installbase are hinging on the hopes that the CAT will erroneously determine cloud to be a distribution model rather than a market, despite the fact that all major regulators agreeing there is an SLC in the cloud gaming market as a result of this proposed acquisition.

That argument seems to primarily hinge on the premise that if a market has the ability to 'cannibalise' another (cannibalise is loaded language here), or is merely a distribution method for the same content, then it cannot be considered separate.

The reality that continues to be ignored is that we consider the streaming market, dominated by Netflix, Disney, and Amazon, and the theatrical box office market, dominated by a handful of studios (including Disney), to be separate markets, despite the fact that theatrical releases find their way onto streaming services, sometimes simultaneously, and would, to a disingenuous idiot, merely be considered different distribution methods.

Cloud is targeted to a different audience, even if members of that audience overlap. Some of those idiots have outed themselves on Reee as not owning Xbox consoles and only playing on cloud.

Even the EU decided that cloud was a separate market, albeit a nascent one.

 

[FatKaz]

It looks like the loons on Reee and Installbase are hinging on the hopes that the CAT will erroneously determine cloud to be a distribution model rather than a market, despite the fact that all major regulators agreeing there is an SLC in the cloud gaming market as a result of this proposed acquisition.

That argument seems to primarily hinge on the premise that if a market has the ability to 'cannibalise' another (cannibalise is loaded language here), or is merely a distribution method for the same content, then it cannot be considered separate.

The reality that continues to be ignored is that we consider the streaming market, dominated by Netflix, Disney, and Amazon, and the theatrical box office market, dominated by a handful of studios (including Disney), to be separate markets, despite the fact that theatrical releases find their way onto streaming services, sometimes simultaneously, and would, to a disingenuous idiot, merely be considered different distribution methods.

Cloud is targeted to a different audience, even if members of that audience overlap. Some of those idiots have outed themselves on Reee as not owning Xbox consoles and only playing on cloud.

An m&a lawyer who has worked on CMA cases called pixis even pointed how ms would be unlikely to succeed if they appealed on the market definition point. Below is his post. Shame he doesn't post enough.

Eh, personally (from experience, albeit I'm a fair skeptic of CAT appeals) I think it would be incredibly, incredibly difficult in this case to try and convince CAT that the CMA has erred on a judicial review basis on its market definition. It was significantly easier in CTM because as you mention, CTM was not a merger case but rather a TFEU/Competition Act case where the underpinning review jurisdiction of CAT is that of a merits jurisdiction on both law and fact - in other words, it could arrive at its own conclusions on any issues in both law and fact and didn't have to apply a judicial review standard to those issues. It could also in that case effectively determine whether the underpinning decision was right or wrong on its merits even if the CMA got the market definition wrong, so it was more than willing to engage in that substantive analysis. In this case, it will need to essentially ask the question (if Microsoft of course raise it as a ground on appeal) whether the market definition choice was on a judicial review standard irrational, or otherwise blatantly false/not materially sound (I doubt they'd go for illegal/procedural impropriety etc!).

Noting how high a bar irrationality is in any case (in this context, a decision so unreasonable that no other reasonable regulator could have arrived at the same conclusion - a ridiculously tough ask prima facie given the two other primary regulators both identified potential competition concerns in cloud game streaming!), as CAT and the CMA have said previously, market definition in the context of mergers is an analytical tool and, flowing from that, you can then appropriately consider relevant theories of harm and SLCs. By the same token, in any given merger you may have multiple, overlapping market definitions (some clear markets, others more obtuse but no less relevant), but the point is the market definitions don't necessarily need to be rigidly drawn for you to then evaluate theories of harm - they can be used as a framework to explore actual competition issues between relevant parties where you have (and what the CMA have, at length, tried to justify in this case) dynamic competition in a market. That's uncontroversial as far as legal principle goes (noting that market definition is not really a rigid legal principle - it's malleable to the context to an extent).

All of which is to say, what the CMA have done in their various filings is try and evidence the above i.e. that drawing very rigid market definitions is difficult and so these are a framework tool to try and then drill down, in particular, to dynamic competition (and potential SLCs) between firms operating in a particularly defined market (in this case, supply of cloud gaming services). CAT have said before that traditional tools of analysis (including, amongst other things, market definition) are not as useful/determinative as they might otherwise be when analysing specifically this (dynamic competition) and in Meta expressly endorsed the idea that weakening of dynamic competition (again, which the CMA in their various reports have at length tried to assert forms the bedrock of their analysis) is absolutely sufficient to then result in a finding of an SLC and the ramifications beyond that point.

It's also probably worth noting, again as CAT noted in Meta (and this is broadly high-level), that asking it on a judicial review standard to effectively quash a decision of the CMA on the basis of getting a market definition "wrong" is difficult because a) the CMA have a wide margin of error in merger cases under the EA2002 to define markets and b) as above, market definition is just an analytical tool to see whether there is an SLC - it's not a rigid barometer that determines whether you (i.e a regulator) get the assessment right or wrong.

Sorry for the small essay (had a lunch break and it's a really interesting question/theory which I've been thinking about for a while!). I'd also note I'm not making any value judgments about the CMA's framing of the market, whether they're right or wrong etc - rather just outlining what their argument is and why I think it's probably very difficult for Microsoft to succeed on this point.

 

[Cool hand luke]

An m&a lawyer who has worked on CMA cases called pixis even pointed how ms would be unlikely to succeed if they appealed on the market definition point. Below is his post. Shame he doesn't post enough.

Thanks for that - very informative post that shuts the door on their hopes and dreams. It's a pity he has to post that disclaimer at the end about how he's not saying the CMA is right or wrong. What a hostile shitshow of a forum.

 

[Edmund]

Has any corporation/mega Corp behaved in such an aggressive manner before when trying to do an acquisition?

The way Microsoft is acting is really scary. They're like the mafia. If they don't get their way, they resort to bribery/politics and force their way in.

If no one can control Microsoft now, then no one ever can.

 

[Satoru]

Has any corporation/mega Corp behaved in such an aggressive manner before when trying to do an acquisition?

The way Microsoft is acting is really scary. They're like the mafia. If they don't get their way, they resort to bribery/politics and force their way in.

If no one can control Microsoft now, then no one ever can.

Welcome to late stage capitalism, where big corporations have become so massive that they control or try to control not only you and the choices you make, but also political power. We've been here a while.

 

[Yurinka]

Has any corporation/mega Corp behaved in such an aggressive manner before when trying to do an acquisition?

The way Microsoft is acting is really scary. They're like the mafia. If they don't get their way, they resort to bribery/politics and force their way in.

If no one can control Microsoft now, then no one ever can.

I'd say that the huge corps 'lobby' (bribe) the politicians but without being aggresive publicly, quite often because they are corrupt and are in politics to earn disonestly money from any source. The thing is that this normally is done via companies of industries like hedge funds, banks, energy, constructions, weapons, big pharma, big tech/social media etc., not gaming. These big economic powers (who also own the mass media to sell their narratives to the people) basically put politicians in power who are their tools.

Gaming is a relatively new and small industry that didn't enter in the power and its dark side.

 

[Swift_Star]

It looks like the loons on Reee and Installbase are hinging on the hopes that the CAT will erroneously determine cloud to be a distribution model rather than a market, despite the fact that all major regulators agree there is an SLC in the cloud gaming market as a result of this proposed acquisition.

That argument seems to primarily hinge on the premise that if a market has the ability to 'cannibalise' another (cannibalise is loaded language here), or is merely a distribution method for the same content, then it cannot be considered separate.

The reality that continues to be ignored is that we consider the streaming market, dominated by Netflix, Disney, and Amazon, and the theatrical box office market, dominated by a handful of studios (including Disney), to be separate markets, despite the fact that theatrical releases find their way onto streaming services, sometimes simultaneously, and would, to a disingenuous idiot, merely be considered different distribution methods.

Cloud is targeted to a different audience, even if members of that audience overlap. Some of those idiots have outed themselves on Reee as not owning Xbox consoles and only playing on cloud.

I don’t CAT can force them into this, can they?

 

[AshHunter216]

I don’t CAT can force them into this, can they?

FatKaz posted something above from a UK lawyer explaining how unlikely that is.

 

[Edmund]

REE showing their dislike for Jim but whenever Phil speaks, they all rush to gargle his balls.

[Famitsu] Interview with Jim Ryan: Importance of Japanese market and games, Spider-Man 2 on PS5, PSVR2, PC ports 2-3 years after release News - Sony

https://www.famitsu.com/news/202305/19302804.html This is google translated so apologies for some jank translations. Imo the main takeaway from the interview is they find it important to find and create games that appeal to Japan, and they see Ghost of Tsushima as a big success for that goal...

www.resetera.com

 

[AshHunter216]

REE showing their dislike for Jim but whenever Phil speaks, they all rush to gargle his balls.

[Famitsu] Interview with Jim Ryan: Importance of Japanese market and games, Spider-Man 2 on PS5, PSVR2, PC ports 2-3 years after release News - Sony

https://www.famitsu.com/news/202305/19302804.html This is google translated so apologies for some jank translations. Imo the main takeaway from the interview is they find it important to find and create games that appeal to Japan, and they see Ghost of Tsushima as a big success for that goal...

www.resetera.com

I don't understand the need from people to have these execs be their "friend". As long as the games I want to play keep coming in and the platform moves in a good direction, I don't really care about the exec.

 

[daniel5043]

REE showing their dislike for Jim but whenever Phil speaks, they all rush to gargle his balls.

[Famitsu] Interview with Jim Ryan: Importance of Japanese market and games, Spider-Man 2 on PS5, PSVR2, PC ports 2-3 years after release News - Sony

https://www.famitsu.com/news/202305/19302804.html This is google translated so apologies for some jank translations. Imo the main takeaway from the interview is they find it important to find and create games that appeal to Japan, and they see Ghost of Tsushima as a big success for that goal...

www.resetera.com

I really want to know what he said in that email

 

[gokuss4]

REE showing their dislike for Jim but whenever Phil speaks, they all rush to gargle his balls.

[Famitsu] Interview with Jim Ryan: Importance of Japanese market and games, Spider-Man 2 on PS5, PSVR2, PC ports 2-3 years after release News - Sony

https://www.famitsu.com/news/202305/19302804.html This is google translated so apologies for some jank translations. Imo the main takeaway from the interview is they find it important to find and create games that appeal to Japan, and they see Ghost of Tsushima as a big success for that goal...

www.resetera.com

They also trash talk Phil to be fair

 

[Swift_Star]

REE showing their dislike for Jim but whenever Phil speaks, they all rush to gargle his balls.

[Famitsu] Interview with Jim Ryan: Importance of Japanese market and games, Spider-Man 2 on PS5, PSVR2, PC ports 2-3 years after release News - Sony

https://www.famitsu.com/news/202305/19302804.html This is google translated so apologies for some jank translations. Imo the main takeaway from the interview is they find it important to find and create games that appeal to Japan, and they see Ghost of Tsushima as a big success for that goal...

www.resetera.com

It’s bots trying to force an inexistent narrative. Jim is fine, he doesn’t have to appeal to these morons.

 

[Swift_Star]

I really want to know what he said in that email

The email stuff is stupid. He’s a CEO, he can’t simply say one side is wrong and the other isn’t in a company. He told people should respect each other at work. But of course era is gonna era.

 

[Dabaus]

It looks like the loons on Reee and Installbase are hinging on the hopes that the CAT will erroneously determine cloud to be a distribution model rather than a market, despite the fact that all major regulators agree there is an SLC in the cloud gaming market as a result of this proposed acquisition.

That argument seems to primarily hinge on the premise that if a market has the ability to 'cannibalise' another (cannibalise is loaded language here), or is merely a distribution method for the same content, then it cannot be considered separate.

The reality that continues to be ignored is that we consider the streaming market, dominated by Netflix, Disney, and Amazon, and the theatrical box office market, dominated by a handful of studios (including Disney), to be separate markets, despite the fact that theatrical releases find their way onto streaming services, sometimes simultaneously, and would, to a disingenuous idiot, merely be considered different distribution methods.

Cloud is targeted to a different audience, even if members of that audience overlap. Some of those idiots have outed themselves on Reee as not owning Xbox consoles and only playing on cloud.

Assuming the CMA can hold out for 2 more months, it wont get to that point. I 99.9 percent think Activsion walks away from this. They dont want to be tied up in courts for another year or year and half when the company is otherwise doing ok. Bobby will get his 3 billion.

 

[daniel5043]

The email stuff is stupid. He’s a CEO, he can’t simply say one side is wrong and the other isn’t in a company. He told people should respect each other at work. But of course era is gonna era.

I think they took the schreier article at face value.

 

[AshHunter216]

Assuming the CMA can hold out for 2 more months, it wont get to that point. I 99.9 percent think Activsion walks away from this. They dont want to be tied up in courts for another year or year and half when the company is otherwise doing ok. Bobby will get his 3 billion.

There's nothing the cma needs to hold out against. They've already made their decision and the only mechanism for changing it won't kick in for another several months at least, meanwhile they've doubled down on their position.

As for the deadline, I could see the deal falling apart if ABK suddenly wants a higher selling price during the renegotiation of the deal and MS doesn't want to pay.

 

[Puff]

Microsoft's planned $69B Activision purchase gets China antitrust approval - report​

Microsoft's planned $69B Activision purchase gets China antitrust approval - report

Microsofts (MSFT) planned $69 billion acquisition of Activision received approval from China's antitrust regulator. Chinas State Administration for Market Regulation granted...

seekingalpha.com

 

[AshHunter216]

Microsoft's planned $69B Activision purchase gets China antitrust approval - report​

Microsoft's planned $69B Activision purchase gets China antitrust approval - report

Microsofts (MSFT) planned $69 billion acquisition of Activision received approval from China's antitrust regulator. Chinas State Administration for Market Regulation granted...

seekingalpha.com

Weird that they did it unconditionally, even the EU wanted some remedies. I guess the market conditions are very different over there.

 

[AshHunter216]

According to Idas, CMA intends this to be their final order, though they're leaving it open for companies to give their final thoughts/objections I think. I expect MS and ABK as well as their allies to object to their decision.