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Comment by etempleton | Hacker News Reader

I think they could possibly say that they will move forward with the merger, but cease to publish or sell games in the UK, but I very much doubt they would. The UK is still too big / profitable of a market.

As an aside, it is interesting to see how this merger is received in the tech space vs gaming space. Most folks in gaming seem to welcome the merger because Activision has long been anti-consumer / bad stewards of game franchises, and many people feel positive about the direction of the Xbox division as of late.

I also think the CMAs rationale for their decision is bizarre and shows a lack of understanding of the space. I can’t help but feel much of European tech regulation is about feeling out of the loop on tech and a certain fear of falling even further behind the United States and Asia.

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The CMAs rationale is definitely not bizarre and is in line with how UK regulators operate.

They tend to look far further into the future and are very much risk averse since they know that their powers are diminished when it comes to managing monopolies than preventing them emerging in the first place.

Yes Cloud Gaming and GAAS is very much a meme still but what about 10 or 20 years down the line?

Microsoft currently owns 70% of that market through the Xbox Pass.

They are also the 2nd largest CSP which means they have the tech and infrastructure to deliver these services anywhere without being dependent on any one.

With this deal they’ll also become true 3rd largest publisher and by sheer IP clout possibly even the biggest.

The argument that the CMA makes is basically that they already have a massive first mover advantage and unlikes the likes of Sony, Valve and Epic they also have their own cloud infrastructure to deliver these services without having to make deals with anyone else. If they’ll also have a massive library of IP and titles that would give them even a larger advantage over other competitors.

The logic behind the CMA’s decision is that this would give Microsoft a natural monopoly in cloud gaming which is hard to argue against. Arguing that it might not be that important is possible but it’s an argument that is very hard to actually back up with any substance since it’s all hypothetical.

Sony has their own cloud infrastructure. They were incredibly early and bought the two largest startups in the space—Onlive and Gaikai. Sony could compete in the space, but their subscription is unappealing to consumers because it costs more and offers less.

Google has their own infrastructure and Nvidia has their own as well. I assume Amazon has their own for Luna as well.

And let’s not kid ourselves, no one is subscribing to Gamepass for cloud streaming. It just happens to be bundled in, so the argument that they have a monopoly is a bit of a farce.

Sony doesn’t have anything close to the scale of Azure and they don’t have the rest of the business model as a backstop to cover the cost of their gaming services.

Google doesn’t have a major gaming brand like Xbox and doesn’t own any publishers - Microsoft has Microsoft Studios and Zenimax already.

NVIDIA same thing they have the hardware business on their side but they don’t have a cloud like Azure, GCP or AWS nor do they have gaming IP in their pocket.

Again the issue is you are looking at this problem from the perspective of today and by taking into account only individual elements.

What the CMA is looking at is Xbox Brand + 70% of the current market + 2nd largest CSP with datacenters all over the globe and the ability to share the cost across other profitable offerings + Being the 3rd largest publisher and owning a fuck ton of gaming IP.

Now extrapolate 5, 10 and 20 years down from that staring point.

And remember you can always make an argument what if Google or NVIDIA invest every last cent they have to give Microsoft a run for their money but you can also make a counter argument what if Microsoft does the same.

In that case Microsoft still is in a far better position because of their current position in the market.

But when you extrapolate more realistically based on existing business models and ventures as well as the actual cost of developing these services further Microsoft is in a very strong position already and possibly the strongest of all players. Making them even stronger is exactly what regulators like the CMA are here to prevent.

Yes, but others could do the same and will have to do the same if they want to get in on the business. It is not some insurmountable problem if Sony, Google, or Amazon wanted to get serious about cloud gaming. Microsoft is making the investment. It might not pay off. You can’t say something might be a monopoly one day. That is ludicrous, anything COULD be a monopoly one day.

Yes in a complete hypothetical scenario anything could become a monopoly but those aren’t the facts we have or the reality we live in.

The point that the CMA made is that the combined advantages that Microsoft has already with this acquisition will position it well ahead of the competition to the point where it will get a natural monopoly. Natural monopolies are still monopolies even if no one else right now wants to compete.

This is literally what regulators like the CMA are here for.

> And let’s not kid ourselves, no one is subscribing to Gamepass for cloud streaming. It just happens to be bundled in, so the argument that they have a monopoly is a bit of a farce.

Ah, I remember this one.

> No one likes Windows better than any other OS, it just happens to be bundled with almost 99% of the computers sold out there.

> No one wants Word over Wordperfect, it just happens to be bundled in the Office suite, and that happens to be installed along Windows in many new PCs.

> No one likes Internet Explorer, it has a 90% market share just because it comes bundled with Windows.

And so on and so forth.

Extend, embrace, extinguish.

"Xbox LIVE Gold" -- AKA online multiplayer on Xbox consoles which most users buy ever since the Xbox 360 -- is $10.

Xbox Game Pass is $10.

Xbox Game Pass Ultimate -- which includes both -- is $15. That's the tier that also has cloud gaming.

Not only is it $20 vs $15, I doubt the account system would let you subscribe to both separately instead of Ultimate.

In addition, consider that Ultimate is available anywhere both Game Pass and "Gold" are available, even where cloud gaming is not. I'm subscribed to Xbox Game Pass Ultimate in Israel, except cloud gaming is not offered here (and not even as "ping may be higher than optimal", it's not even in the UI unless I VPN).

If someone's counting Ultimate subscriptions as "cloud gaming subscriptions", they would be heavily inflated from "cheaper bundle" users and users from countries where cloud gaming isn't even available.

> If someone's counting Ultimate subscriptions as "cloud gaming subscriptions", they would be heavily inflated from "cheaper bundle" users and users from countries where cloud gaming isn't even available.

The report states that Xcloud is available in a handful of countries, and compares it to its rivals, but the point they make is about available content, which concerns the acquisition.

In other words, even if Microsoft accounted for 60 or 50% of the global cloud gaming numbers, CMA foresees a scenario where they use an extremely popular franchise to increase the value of their offering, while decreasing the attractiveness of their competitors. They also back it with some numbers that suggest that CoD could drive platform adoption up.

> Our survey asked CoD gamers on PlayStation to think about the time when they bought their most recent PlayStation. The survey asked what they would have done if the most recent CoD game they owned at that time had not been available on PlayStation, but had been available on Xbox and PC.

> Results indicated that 24% of respondents would have bought an Xbox, a PC, or no gaming device at all instead of a PlayStation.

>I also think the CMAs rationale for their decision is bizarre and shows a lack of understanding of the space.

They blocked the acquisition on a premise that cloud gaming will be huge in the future and that Microsoft might make Activision Blizzard games exclusive to their Xbox Cloud. Taking in consideration Microsoft's enormous comparative advantages like owning Xbox, Xbox Cloud, Game Pass, Windows, Microsoft Azure plus lots of gaming franchises, this block somewhat makes sense.

But what worries me the most is Zenimax acquisition that gave Microsoft some of the most iconic gaming franchises of all time (Doom, Quake, Wolfenstein, Fallout, Elder Scrolls) and the reality is that most likely these franchises will never see a day of light on any other cloud gaming platform except Xbox Cloud.

I can't believe that Zenimax and Bethesda gave in and sold out to the Microsoft despite thriving on their own.

CMA and FTC should've blocked Zenimax acquisition first which would then discourage Microsoft from attempting to acquire Activision Blizzard. But that unfortunately didn't happen, quite the opposite Microsoft grew even more greedier after acquiring Zenimax.

The problem is by size Sony is larger, with more studios and more exclusives. Nintendo is also huge.

Cloud gaming has a lot of competition and they all are companies with deep pockets: Microsoft, Sony, Nvidia, Google, Amazon. They can afford to do what Microsoft is doing if they so choose. This isn’t some new paradigm. This is how this business is run. If it is not console exclusives it is platform exclusives. It is the only real differentiator.

But Microsoft has the upper hand in the cloud gaming industry according to CMA. Apparently Xbox Cloud has 60-70% of the market share. Activision Blizzard acquisition would only strengthen Microsoft's position and would not improve competition.

> Apparently Xbox Cloud has 60-70% of the market share. Activision Blizzard acquisition would only strengthen Microsoft's position and would not improve competition.

The same way they "controlled" the smartphone market with Windows Mobile in the pre iPhone/Android days?

It's an entirely new market. 60-70% of all current users is an insignificant proportion of all potential users so it doesen't mean much. And well it's not their fault that they other megacorps like Google are so incompetent.

You are a subscriber to cloud gaming if you have GamePass, but I don’t think many actually use it, so to say they have such a huge advantage is an argument in either ignorance or bad faith.

> likely these franchises will never see a day of light on any other cloud gaming platform except Xbox Cloud.

Do you know somebody nobody else outside MS does? Cause that doesen't seem at all likely to me.

I looked at some of the most recent games released or to be released by Microsoft, like:

Grounded

- Age of Empires IV

- Forza Horizon 5

- Halo Infinite

- Psychonauts 2

- Minecraft Legends

- Ara: History Untold

Guess what, every single one of them is available on Steam.

I was speaking about other cloud gaming providers not Steam. And Steam is the biggest digital distributor of Windows PC games so it makes 100% sense for Microsoft to offer their games on Steam.

A large part of the remedy that Microsoft offered was to give cloud streaming licenses to every competitor for free for its entire portfolio of games. Every single cloud gaming company is wildly in favor of the merger for this reason. Funny how it works - with CMA killing the deal it’s likely that Microsoft will go back to the status quo and keep its IP to itself to increase the barriers to entry

> But what worries me the most is Zenimax acquisition that gave Microsoft some of the most iconic gaming franchises of all time (Doom, Quake, Wolfenstein, Fallout, Elder Scrolls) and the reality is that most likely these franchises will never see a day of light on any other cloud gaming platform except Xbox Cloud.

And this time: that's already the case for Activision Blizzard. They are not available on any cloud gaming service, by design. They were cease-and-desist-ed off NVIDIA's GeForce NOW and the EULA directly forbids running on cloud gaming services or devices.

>cease to publish or sell games in the UK

Wouldn't they need to cease all Microsoft activities in the UK? It's not some Microsoft Gaming Corporation that wants to buy Activision-Blizzard, it's Microsoft Corporation.

It is possible they would have to pull out entirely, that is what Microsoft’s lawyers are threatening could happen, but it won’t. It is too costly for both sides.

It is a challenge for Microsoft, but honestly I don’t know how much sway the CMA has here. They don’t have a ton of leverage to block the deal if every other country is onboard. My guess is they will ask for some specific concessions.

> Most folks in gaming seem to welcome the merger because Activision has long been anti-consumer / bad stewards of game franchises, and many people feel positive about the direction of the Xbox division as of late.

Yes, my big hope here is selfishly that Microsoft is able to salvage what's left of Blizzard and Microsoft has been the most consumer friendly of the big 3 this last couple of generations.

Microsoft has a couple options all of which are viable IMO:

1. Appeal

2. Withdraw from the UK market and force the issue politically. Microsoft can eat the loss of the UK market for a long while if they want while forcing UK politicians to answer constituent questions why Microsoft/Activision games are banned in the country.

They aren’t going to jeopardize their enterprise sales business by blockading the UK.

> ... but cease to publish or sell games in the UK, ...

Does they have to?

I guess they can have separate entity (or a reseller) to import those software and sell them in UK.

It's far worse, any company doing business with Microsoft will have hard time doing business in the UK.

Compemt of courts is no joke

Microsoft would sooner opt out of selling in the UK then they would China.

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