EU Makes Microsoft 'Automatically License' ActiBlizz Cloud Games Post-Merger

Don't see how this leaves the CMA with a leg to stand on - given it removes their biggest argument that Microsoft could use ABK to block "future unspecified" new competitors...

Instead, those new entrants can guarantee they'll have access to at least one big publisher's biggest games so have a decent library to start with...

@Wheatly Not exactly - firstly, the licence agreement made here is a perfect showing of the fact the CMA didn't rationally review potential mitigations - so this deal being worldwide actually gives new facts for the case.

The CMA has been found to have misunderstood its remit, exceeded its powers or been irrational when assessing mitigations in a few cases at CAT including Compare the Market and BMW / VW, and they were overruled

Secondly, that's only the requirement for the CAT appeal. If necessary, the decision can be appealed in the High Court (as happened in MyFerryLink) where those limits do not apply - the court can rule against the CMA on a simple basis of law.

@UltimateOtaku91 Correct, any popular ABK games that Sony wished to licence for cloud, Microsoft will have to licence to them.

While they say free licence acquisition, they don't actually say "free licence" so I suspect you still have to pay the usual percentage any retailer does (or a bulk licence or per-play licence for a subscription based service) but I very much doubt Microsoft would use unfair pricing as that would open them up to remediations.

I don't think Microsoft have an issue with this anyway - most of the last 2 months' PS Plus additions have been Bethesda

@Kaloudz Yep tomorrow's committee hearing will be interesting, and when hearings finally start with the CAT the CMA will likely be on the defensive or will announce some minor tweak to this deal that they can trumpet as a win.

A recent Motorola case where they've argued "significant overreach" by the CMA, Apple winning against the CMA based on a legal misunderstanding and the CMA head's own previous employer joining the battle against her all suggest the odds are stacked against the CMA now.

And that's before we even get to the UK government having been embarrassed by the CMA due to it conflicting with the "UK open for business" campaign and saying they intend to provide "steer" to the CMA...

@UltimateOtaku91 Yep it may definitely make for an interesting battlefield, where cloud becomes more of an extension of PC for now rather than consoles - where exclusives don't exist as much.

It only covers ABK's "popular" games - I do wonder if that's a fixed list or by some metric, so whether it may cover some new ABK game that ends up being hugely popular.

I can honestly say though if both Sony and Xbox manage to get cloud to a position where it's as fast and reliable as a console, we may all win as while I love my consoles and PC they do cost a lot to keep current...

@Wheatly New evidence such as this deal can be presented - the CAT is a legal tribunal in the UK led by judges, and in our system a judge has huge sway to decide the bounds of their own case.

In addition, Microsoft only have to have even hinted at a deal such as this one in communications with the CMA, and they can show this deal as being available but the CMA irrationally not wanting it.

Finally, yes it can still be taken to court, as nearly any dispute or decision can be - and there new evidence can be evaluated and remedies / settlements are encouraged.

The CMA is definitely not popular with the UK government for this decision at the moment, as it goes against the whole "open for business" marketing - and the two sides trumpeting their investment in the EU in the media about today's decision will not please the government either.

And despite being "independent", in reality any quango in the UK is only as independent as the government allows it to be - laws can easily be introduced to amend their powers, and indeed a new law was passed recently that gave ministers more power to intervene in decisions - which can be used as a threat when they're suggesting they'll provide more "steer" to the CMA.

@UltimateOtaku91 Yep they definitely need to work on controller technology.

For example the Xbox Wireless Protocol that Xbox controllers use when connected to Xbox consoles or their own dongles can support many more controllers than Bluetooth and have higher throughput and lower latency - so a Project Keystone device could use it and perhaps help with that issue...

@Kaloudz If you're in the UK, BBC Parliament will no doubt have the full thing, with the news channels dipping in and out.

It might be available on Gov.UK or the BBC News website too.

I suspect it may be up to half of it given they'll want to know why the CMA came up with a different result to the EU - but I suspect some will also just be generic competition questions and about other markets they regulate.

@Wheatly I think rationality can be called into question when they're blocking attempts to compete with a high-end console market leader that doesn't place nice - all because of some future market that may not even exist in time, and is tiny at the moment.

For all we know, neural connectivity will have a sudden breakthrough and we'll all play games connected to our phones with cloud gaming antiquated - for a bet on a future market, they're hurting a much bigger existing one.

That, plus the "open for business" UK angle, as well as the obvious remedies that Microsoft were willing to agree to (if not then, they have now - and that will be taken into account as it's common sense to include it which means a judge will) are definite grounds for rationality arguments.

With regards to it being returned to the CMA, it's only a courtesy - the CMA are given instruction and are not allowed to do anything that breaches the CAT's ruling, as their judgment is considered higher.

And our courts, short of Parliament passing new laws, are the ultimate arbiter of both our laws and their meaning - they can and will find against bodies if they find misuse of process or clearly fault decision making - they did so when telling Boris Johnson he illegally prorogued Parliament for example.

I'm not sure it'll even go to CAT though, with today's announcement and the embarrassment for the UK government I suspect the CMA will push for some minor "win" they can trumpet as an extension of today's deal that they "secured" and will change their mind - which they have the full power to do.

As for quango, it's just a term used for any "independent" body in the UK nowadays - given the UK government where Parliament is supreme can decide to do anything it wants with those bodies.

@Tharsman Agreed, that's what I meant about them acting as the "retailer" - either the player buys the game elsewhere or buys through them (like Stadia had).

I wouldn't be surprised if there is some caveat for subscription services too, say "a fair market rate per play" or something to ensure new entrants into the market can offer such a thing - if not, maybe they can offer the CMA that as the sweetener so CMA can say "deal approved as we got a major concession!"

@Wheatly The proroguing of Parliament did have to clarify a point of law which hadn't previously been tested though, but agreed it's likely not going to apply here.

My "open for business" comment is more about why I think the CMA will come under pressure to do a deal of some kind - given a minister can already overrule the CMA under the recent law change, they are likely aware of Brexit Britain's pretty poor world standing and sounding anti-business isn't a great thing for our national economic welfare which is one of reasons for overruling.

I completely agree about not knowing how judges will act, but we do know one judge in this CAT panel is a patents special FOSS Patents knows, and his judgments have generally been balanced and look at harms as well as what remediations have been offered.

Finally, that figure for the UK cloud market was picked out of thin air by the CMA based on dodgy numbers (for example how they count Ultimate subscribers and XCloud players) - it's likely a smaller market right now (given XCloud can support less than 10k concurrent UK users) and both its size and the CMA's faulty figures can factor into the appeal.

@Wheatly Also, with regards to a company swallowing up an emerging market, this deal specifically stops that.

When many of Microsoft's biggest games will be on all their competitors, why would you sign up for XCloud when you could go with Luna or PSNow that may have some exclusive games plus CoD etc.?

They're literally inviting competition in to the market rather than trying to shut it out

@Wheatly Yes but COD will be ALL the cloud platforms because of the EU deal.

That I think is the key point now, that new entrants will have an edge because they will have COD plus any exclusives they've bought / brought in.

@Wheatly Yes but unlike the lazy CMA, the EU will enforce it and have a history of enforcing such decisions - plus I imagine it will be signed in binding documents.

So it can certainly be used in the arguments against the CMA - the fact they couldn't be bothered to ensure remedies were stuck to doesn't mean such remedies weren't sufficient, and that a regulator would refuse to enforce any provisions is pretty weird.

It does strike me as the CMA being annoyed by the Compare the Market decision not going their way, so saying "we can't fine people as they appeal" so deciding they don't want to be an enforcer - which can't be a sustainable path given it's their legal duty...

@Wheatly Firstly, the agreement is worldwide according to MS, and I've no doubt is all properly set out.

Secondly, it does affect the appeal, as new evidence can be looked at in the CAT - particularly as MS can point to it being the kind of remedy they were open to.

Thirdly, the EU's decisions often have an effect worldwide - they have forced numerous remedies on Microsoft, Facebook and Google that have had a global impact - it's unlikely that the UK would be carved out of such a deal as it's cost prohibitive to do so, and if the deal applies in the UK I imagine any breach would occur in all regions so be subject to a joint investigation by the different regulators.

If the CMA were to come out and go "since leaving the EU, we're not big enough to manage such enforcement action" then it pretty much admits Brexit is a failure and they'd likely find the Tories passing laws to scrap them and replace them with a new body - at best, it suggests they need to work closely with the EU regulator still which is a win for this deal.

@Kaloudz No problem lol, enjoy - I've no meetings tomorrow so can keep it on in the background.

My only fear is if any of the MPs have actually spoken to Microsoft or any non-Sony-supporting experts - as if they're just getting their soundbites from their children many of those will be Sony or Nintendo fans who probably dislike Xbox anyway...

@Wheatly I agree, me calling them lazy is more my own conjecture and not really fair.

But if their point turns out to be they can't be expected to enforce such a remedy as the EU's one because of their size or funding, then it'll seriously annoy the government who will likely reform them or force co-operation with the EU regulator as it highlights the UK alone is weaker.

With regards to the CAT, I'm more on about the fact that judges still have wide scope so can choose to not ignore a remedy that is so obviously relevant to the case - particularly if MS reveal such a remedy was offered to the CMA.

If it wasn't, and the judges choose not to accept it, then I suspect it'll instead come up at the next stage (Court of Appeal) which has no such limited room for review.

Anyway yes I agree let's see how this plays out - FOSS Patents is a specialist in this area and he reckons the irrationality boundary is easily met (although I admit he has lost his mind a little over this deal!) so it'll be an interesting one to watch regardless

My only hope is it's months at a maximum as Xbox can't afford years wasted on this...

@Kaloudz Thankfully it'll be a committee as far as I'm aware, which are normally meeting rooms and much more quiet, where a question must be heard or the audience will be thrown out or participants found in contempt.

They're similar to hearings in the US Senate and House but a bit more grown up usually

@Wheatly Agreed, a civilised discussion and now to a relaxing evening of gaming

Have a good one

@Kaloudz Lol it's from 10.30am in front of the Business and Trade Committee - much of it may be dull procedural stuff on how the CMA works, what it understands its role and limits to be etc.

Unfortunately whether the supermarkets may be price fixing has just been announced as an investigation by the CMA so given it's linked to the cost of living and so is popular, it may take up all the breathing room.

It may be very clever of the CMA to announce that this evening...

Either way I'd expect at least a question or two on ABK but I doubt much new information or any admittance of error will be made, so could always record it and look at any highlights FOSS Patents highlights lol

@Kaloudz Lol OK, although if it's all supermarket related I'll have to take the fall for underestimating the CMA - releasing information on the price gouging investigation the night before the committee hearing is clever.

FOSS, Florian Mueller, has been around a while as a patent lawyer from what I can tell, who's often advised on big cases and seems to know a few judges and MPs.

Obviously it's impossible to tell completely online, but while he's not a specialist in mergers by his own admission - and has gone a little insane over the ABK merger I think - he's definitely used to tribunals, regulators and legal documents so his insight is valuable.

In addition he apparently knows one of the judges who will be on the three-person CAT panel, who he holds in high regard with good technical ability so it may be a positive for Microsoft...

@Kaloudz Yep I deal with lawyers often and he's easier to understand than many lol

@Kaloudz I wouldn't bother watching it to be honest - it's only on the Gov.tv website, not even the BBC etc. and they've covered Activision and now mostly on to the supermarkets stuff:

https://parliamentlive.tv/event/index/625b836d-971f-47ee-b4b5-e537eca5d70f

They claimed confidentiality when asked about her contact with the FTC chair and if there was collusion, which seems a bit weird, and otherwise have just kept talking about independent panels and competition - also saying their approach to nascent markets is to block (which is the opposite approach of what legislation says as far as I know, which is about theory of harm which would be unknown at that point).

FOSS Patents is watching live and commenting on it (which is pretty caustic to be honest - I think most hearings like this are pretty uneventful anyway):

https://twitter.com/FOSSpatents/status/1658411152487993345

Also interesting one from Tom Warren, pointing out in an FT article the EU say the CMA is incorrect in its calculation of the cloud market (which fits with what FOSS Patents has been saying and with the CMA screwing up the CoD harm maths earlier that they had to correct):

https://twitter.com/tomwarren/status/1658408320057630721

@Blessed_Koz Yes I've read the details that are available.

The agreement is for free licencing for any BYOG provider (such as GeForce Now currently), while the terms for any sells-you-the-game provider (like Stadia was) or subscription provider (such as Luna or XCloud itself) aren't clear but are suggested to be fair market pricing but the process of licencing itself will be free (so no additional processing charge for example).

It's not in Microsoft's interests to make the fee sky high, as not only would they lose sales it would very much break the spirit of the agreement with the EU - and unlike other jurisdictions they've got few qualms in enforcing their rules, so could levy huge fines or even force the unwinding of the ABK takeover.

@Kaloudz Yeah I suspect one MP wasn't impressed with their answers or their investigation and conclusion, so did push them quite hard.

And yes they literally stuck to the script - with Satya not ruling out carving out the UK today in a US interview (Tom Warren again has highlighted it on Twitter), I really hope the CMA are overruled as otherwise it's likely us in the UK that lose out...

@Kaloudz Yep lol, there's definitely hints in everything they all say