Microsoft Will Meet CMA Halfway Via A ‘Small Divestiture’

Microsoft has apparently settled on some compromise with the CMA to allow them to complete their acquisition of Activision Blizzard King.

As reported by CNBC, Microsoft has agreed to a ‘small divestiture’ to address the regulator’s concerns.

For those who need a review of the CMA’s decision, the UK regulator rejected the console gaming theory of harm, but upheld that Microsoft has an opportunity to ‘foreclose’ the cloud gaming market.

In particular, the CMA saw Microsoft’s ownership of the Azure platform and their dominance on cloud gaming operating systems as reasons to ‘prevent’ the deal.

Azure is one of, if not the top business segment in Microsoft. In terms of operating systems, most cloud gaming providers use programs and systems that run on Windows, and the CMA has found that alternate OSes like SteamOS are not quite up to the task to compete with Windows yet.

If you may be confused as to what changed in the CMA’s decision, on a basic level, they did not agree to any remedies and chose to just reject the deal. Today, they are willing to explore remedies with Microsoft, and this ‘small divestiture’ seems to meet that criteria.

So it seems that the ‘small divestiture’ is likely to be Microsoft abandoning cloud gaming in the UK. They may opt to form a third company, that takes charge of Microsoft owned games, including those made by companies like Bethesda and Activision Blizzard King, specifically so that smaller UK based cloud gaming companies can offer them.

In the worst case scenario for UK consumers, the CMA may have simply forced Microsoft to not do any cloud gaming business in the UK completely. This certainly would be a contradictory and undermining decision on the side of the CMA if that were the case.

But it is also the case that the CMA’s decision has confused the general public, including lawyers and other experts who would have expertise in the field. That decision has also proven to be controversial in the UK itself.

It had gotten so bad that the CMA received a stunning public rebuke from MP Bim Afolami in a public general oversight hearing.

It had reached a point that Microsoft’s appeal vs the CMA decision was fast-tracked by the government. However, following FTC’s failure to get their injunction approved to block the deal, the CMA decided to negotiate with Microsoft again instead of defending their decision in their appeals court.