Microsoft failed to convince the EU that their Activision deal would not trigger the cloud gaming theory of harm. For this reason, they had to offer remedies to competitors, namely the 10 year deals for Call of Duty that they gave their console competitors in Sony and Nintendo, as well as cloud gaming companies Nvidia, Ubitus, and Boosteroid.
With all that said, it is interesting to see what arguments Microsoft made for their case. As you may see, the EU may have been in the wrong in their judgement.
Microsoft lays out their argument on paragraph 472, page 113 of the document:
“The Notifying Party submitted that no anticompetitive effects will arise even if Activision Blizzard’s content was made exclusive to Game Pass and Xbox Cloud Gaming. It argued that neither Nvidia, the “clear market leader” in cloud gaming, nor other providers of cloud game streaming services could be foreclosed.
In particular for Nvidia, it has sufficient content to remain the leader in the race for the provision of cloud games streaming services and has managed to achieve this success without any Activision Blizzard content. Moreover, not having access to Activision Blizzard’s content would not force any supplier of cloud game streaming services to exit the market.
Finally, even if the Notifying Party made Activision Blizzard’s games exclusive to Xbox Cloud Gaming, Sony and Steam would remain the market leaders in the overall market for the distribution of console and PC games.”
Microsoft’s argument is interesting, in that they claim even in the considerably smaller market for cloud gaming, Activision Blizzard games aren’t important to their success. It is true that these cloud gaming companies, including Microsoft itself, are not able to offer Activision Blizzard games like Diablo and Call of Duty on the cloud. Thanks to Activision’s declarations to regulators, and in the documents they have shared, we also know that this is because the company itself has no faith in cloud gaming on its own.
Microsoft also notes that Nvidia’s GeForce Now service is the market leader in cloud gaming, that is, if we take away Microsoft’s cloud offering on Game Pass. Well, Nvidia used to offer cloud gaming for Activision Blizzard’s games under GeForce Now. Activision pulled their games from the service in February 2020 because of a misunderstanding in the terms.
If it is conceivable that at one point Activision Blizzard games swayed gamers to play Nvidia GeForce Now, it is also true that Nvidia has managed to keep the service going after they lost Activision Blizzard.
But truthfully, it is hard to parse this as a success for Nvidia, at least if they don’t corroborate this themselves. We do know that cloud gaming isn’t guaranteed to succeed, and there are so many other factors that go into that.
Microsoft pledging Call of Duty to other cloud gaming companies does not guarantee that cloud gaming is going to succeed, much less thrive. But it certainly gives the business a better fighting chance than it would have without it.
In the inherent paradox of this deal, because Microsoft offered these contracts to these cloud gaming companies, they guarantee that Nvidia, Ubitus, Boosteroid etc get that much more of a chance to succeed. The best outcome for cloud gaming would be unlocked, if Microsoft and Activision are able to finalize the deal.
