Cloud game forecast: climate of fear with patches of duplicity
EU regulators have broken ranks with the UK’s Competition and Markets Authority (CMA) over a potential market rigging by a company with a history of competition suffocating allegations against it. This time the regulators have been ruling over the proposed attempt by Microsoft to buy video games company Activision Blizzard for $69bn. In April Annie Turner reported that the UK’s Competition and Markets Authority (CMA) had blocked the proposed £65 billion takeover by Microsoft of Activision Blizzard. In a statement the games company, best known for Call of Duty, complained the UK is closed for business after was prevented from making acquisition history in the gaming sector. A Microsoft games spokesman also threw his controller on the bed and said the CMA’s decision will discourage innovation and investment in the UK. Activision Blizzard added that it would reassess [its] growth plans for the UK. They had more sympathy with the regulator next door.
UK regulator the CMA is concerned that Microsoft would ultimately limit access to Activision Blizzard’s most popular titles, such as Line of Duty, to its own subscription service, Xbox Cloud Gaming and Xbox hardware platform. This could stifle the free market and lead to a pattern of serial competition killing that has been seen before. Since Gaming is the biggest entertainment sector in the UK, with streamed games played on multiple non-specialist gaming devices (like TVs to tablets, phones and computers) rather than expensive, dedicated consoles with a library of content dictated by the platforms’ owners.
“Microsoft already enjoys a powerful position and head start over other competitors in cloud gaming and this deal would strengthen that advantage giving it the ability to undermine new and innovative competitors,” said Martin Coleman, chaired panel of experts conducting the investigation into the proposed acquisition.
Activision Blizzard promised to work aggressively with Microsoft to reverse this on appeal. The lobbying clearly worked on the EC, perhaps because it has no interest in supporting the UK’s gaming sector. After an ‘in-depth probe’, the commission has ruled that the proposed acquisition would “no longer raise competition concerns”, and it would ultimately “unlock significant benefits for competition and consumers” as Microsoft has ‘pledged to fulfil certain commitments’ related to cloud gaming. As such, Microsoft will provide a free 10-year licence to consumers in the European Economic Area (EEA) that would allow them to “stream, via any cloud game streaming services of their choice, all current and future Activision Blizzard PC and console games” for which they have a licence, reported Telecom TV. There will also be a decennary free licence to cloud game streaming service providers allowing EEA-based gamers to stream “any Activision Blizzard’s PC and console games”.
The commission explained the rationale of its apparent duplicity. It claims that that the new licensing policy will ensure that consumers will be able to stream Activision games via “any cloud game streaming service of their choice and play them on any device using any operating system”. It reached this conclusion after finding that Microsoft would have no incentive to refuse to distribute Activision’s games to Sony, which is the leading distributor of console games worldwide.” Margrethe Vestager, the EVP of the European Commission in charge of competition policy, said the decision is “an important step” in the direction of protecting both competition and innovation in the gaming industry.