UK Blocks Microsoft’s $69 Billion Activision Deal

[Draco-Onis]

China is irrelevant and a completely different situation to this potential consequence.

How so? at the end of the day it's about the bottom line benefits versus cost, if the EU and the US clear the merger then the UK doesn't matter.

[Edge-]

How so?

That was a breakdown of negotiations in an already precarious and fickle market. Completely different situation to this.

at the end of the day it's about the bottom line benefits versus cost, if the EU and the US clear the merger then the UK doesn't matter.

Yes, the UK still matters. If Microsoft and/or ATVI cannot legally operate in a major developed nation, even if it's a small market on the global scene, that has significant ramifications. Or if they operate and simply eat fines daily.

This is all assuming they won't find a way to clear this through, which they most assuredly will, making this all academic. But really, losing access to the UK market would be an enormous hurt for any major company.

[Draco-Onis]

Yes, the UK still matters. If Microsoft and/or ATVI cannot legally operate in a major developed nation, even if it's a small market on the global scene, that has significant ramifications. Or if they operate and simply eat fines daily.

This is all assuming they won't find a way to clear this through, which they most assuredly will, making this all academic. But really, losing access to the UK market would be an enormous hurt for any major company.

You still haven't explained mathematically how because assuming the UK is smaller than China which is safe bet it makes no sense to halt the merger because of one country. The cost savings from streamlining the business after the merger will be in the billions more than making up for whatever tiny slice the UK represents.

[Edge-]

You still haven't explained mathematically how because assuming the UK is smaller than China

Please for the love of god stop this comparison. These two situations are completely different and have literally nothing in common. There is no direct comparison here between losing access to China for ATVI-only and losing access to the UK for ATVI and Microsoft - purely hypothetically.

it makes no sense to halt the merger because of one country.

I'm not sure if there's precedent here, but yes, it can be. Because the potential beneifts from the merger for Microsoft might not make up the losses from hypothetically losing access to the UK market directly. VPN's only go so far and largely only impact a minority of consumer spending, which is a fraction of Microsoft's overall business which includes enterprise efforts they'd no longer be able to operate.

The cost savings from streamlining the business after the merger will be in the billions more than making up for whatever tiny slice the UK represents.

What cost-savings? They're spending $70B on this and while they'll have layoffs for redundancies I'm not sure what cost savings you're talking about. Especially for the broader Microsoft business which isn't directly impacted by this acquisition. This does little to, for example, the Office team and their services and products.

[Draco-Onis]

Please for the love of god stop this comparison. These two situations are completely different and have literally nothing in common. There is no direct comparison here between losing access to China for ATVI-only and losing access to the UK for ATVI and Microsoft - purely hypothetically.

It's a simple comparison of market sizes and access, Microsoft does operate in China as well.

I'm not sure if there's precedent here, but yes, it can be. Because the potential beneifts from the merger for Microsoft might not make up the losses from hypothetically losing access to the UK market directly. VPN's only go so far and largely only impact a minority of consumer spending, which is a fraction of Microsoft's overall business which includes enterprise efforts they'd no longer be able to operate.

Yes it could be but I would wager that this isn't going to make much of a difference to the bottom line besides if the EU and the US approve the UK will eventually fold.

What cost-savings? They're spending $70B on this and while they'll have layoffs for redundancies I'm not sure what cost savings you're talking about. Especially for the broader Microsoft business which isn't directly impacted by this acquisition. This does little to, for example, the Office team and their services and products.

This math of yours only works if Activision is worth $0, they are getting a company at a deep discount to its value due to the scandals. They will make further cuts with layoffs and closing of locations.

[Pann]

Do you not know what a VPN is? you know what forget it keep arguing with yourself.

Yes I do. Neither Microsoft nor Activision will defy UK regulators and they will certainly not rely on their customers using VPNs to get around a CMA ruling.

Your whole argument which started with the UK is irrelevant because it is no longer a part of EU and has now migrated to MS and ATVI ignoring UK authorities because of VPNs is, from start to finish, complete nonsense.

[Elegiac]

This is all assuming they won't find a way to clear this through, which they most assuredly will, making this all academic.

This is really all that needs to be said.

Microsoft will certainly appeal this ruling and if both US and EU regulators give the merger the all clear (which they appear to be likely to), the UK isn't going to have much in the way of stable footing to block it.

[NED funded]

I saw a comment about it but I wonder if Activision is willing to sacrifice another market? They already lost the market in China, will they be willing to risk the market in the UK or is joining efforts with Microsoft that worth it. IG its on Microsoft to call the shot here tho since they prob would have to abandon that market too. Is Activision that worth it?

[zEmini]

I am really curious what would happen if MS just said fuck it and ignores UK completely. What happens to all the Xboxes and PC's that run windows in the UK? No more updates? Do you thnk the business community in the UK would jsut stand by and let their government take it all away? The costs of having to train and learn Apple or Linux alone would costs billions to both businesses, citizens and the government. I think UK will fold if pressed hard.

[Altariaz]

This is really all that needs to be said.

Microsoft will certainly appeal this ruling and if both US and EU regulators give the merger the all clear (which they appear to be likely to), the UK isn't going to have much in the way of stable footing to block it.

It is not so straightforward.
The UK's CMA ruled that in cloud gaming, an emerging technology in which games are streamed Netflix-style, Microsoft plus Activision might become excessively dominant. Microsoft is already the biggest player in cloud gaming, with some two-thirds of the worldwide business. Control of Activision’s catalogue of hits might make it unassailable, the CMA said, adding that it doubted the effectiveness of ten-year deals in a new and fast-changing market.
The US and EU regulators seem to understand this point.
Ultimately, it depends on the best way to promote competition (ie, what is to the consumers interest), not monopoly.

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I am really curious what would happen if MS just said fuck it and ignores UK completely. What happens to all the Xboxes and PC's that run windows in the UK? No more updates? Do you thnk the business community in the UK would jsut stand by and let their government take it all away? The costs of having to train and learn Apple or Linux alone would costs billions to both businesses, citizens and the government. I think UK will fold if pressed hard.

Why would MS behave in such an irrational manner? There exist legal avenues to explore: That is the way forward.

[zealo]

Microsoft isn't going to pull out of the UK over a merger/acquisition being blocked, if the deal doesn't go through and they can't get it past regulators they'll just eat the couple of billions fines to Activision as part of cancelling the acquisition and that's that.

I know this may not be all that apparent to some on a gaming forum, but MS didn't become a company with a market cap of 2.2 trillion USD through their gaming division.

[Elegiac]

It is not so straightforward.
The UK's CMA ruled that in cloud gaming, an emerging technology in which games are streamed Netflix-style, Microsoft plus Activision might become excessively dominant. Microsoft is already the biggest player in cloud gaming, with some two-thirds of the worldwide business. Control of Activision’s catalogue of hits might make it unassailable, the CMA said, adding that it doubted the effectiveness of ten-year deals in a new and fast-changing market.
The US and EU regulators seem to understand this point.
Ultimately, it depends on the best way to promote competition (ie, what is to the consumers interest), not monopoly.

This doesn't hold water considering the CMA's permissive attitude towards platform exclusives. See: Sony, Nintendo.

[Milchshake]

Feels like the UK is just finishing up it's first lost decade and stamping it's feet for international relavance.

It's Japan, minus the charming cultural exports of Nintendo, Baby Metal, and anime.

[Draco-Onis]

Microsoft isn't going to pull out of the UK over a merger/acquisition being blocked, if the deal doesn't go through and they can't get it past regulators they'll just eat the couple of billions fines to Activision as part of cancelling the acquisition and that's that.

I know this may not be all that apparent to some on a gaming forum, but MS didn't become a company with a market cap of 2.2 trillion USD through their gaming division.

But do you honestly think that if the EU and US approve the UK will pull all MS products and support? Imagine the backlash as millions of UK workers have to be retrained on new software because of this. The UK government alone has no leverage they would be voted out and the next government would speedily approve of it.

You can also look at it another way how much of that 2.2 trillion is from the UK? probably a rounding error.

[postman1782]

Even to suggest that Microsoft or ATVI would try to circumvent UK regulations is complete and utter nonsense.

Nope, they would just block them from buying their games. Done deal.

[Evil Midnight Bomber]

The Financial Times describes it as "[The ruling is] a huge blow to the deal’s global prospects and comes ahead of regulatory decisions in the EU and the US, with the Federal Trade Commission suing to block the deal last year." But what do they know, huh?

It's a blow because if the UK finds a problem with the merger...it becomes more likely that the EU and US will as well... not because the UK is a vital market that MicroActiBlizz would need to tap into.

[zealo]

But do you honestly think that if the EU and US approve the UK will pull all MS products and support? Imagine the backlash as millions of UK workers have to be retrained on new software because of this. The UK government alone has no leverage they would be voted out and the next government would speedily approve of it.

You can also look at it another way how much of that 2.2 trillion is from the UK? probably a rounding error.

Sigh, as is way too frequent these sorts of line of thoughts stop a few steps short of where they ought to.

Do you really think the UK is the only country that would start getting nervous and having second thoughts about Microsoft products and Microsoft in general, when it is underpinning a whole ton of other economic and governmental activity, if they decided to retaliate against regulatory action blocking an acquisition like that?

[Nymrohd]

But do you honestly think that if the EU and US approve the UK will pull all MS products and support? Imagine the backlash as millions of UK workers have to be retrained on new software because of this. The UK government alone has no leverage they would be voted out and the next government would speedily approve of it.

You can also look at it another way how much of that 2.2 trillion is from the UK? probably a rounding error.

Sigh, as is way too frequent these sorts of line of thoughts stop a few steps short of where they ought to.

Do you really think the UK is the only country that would start getting nervous and having second thoughts about Microsoft products and Microsoft in general, when it is underpinning a whole ton of other economic and governmental activity, if they decided to retaliate against regulatory action blocking an acquisition like that?

What they can do is not offer ATVI products from Microsoft cloud services in the UK. Expect the UK version of Game Pass to not include ATVI titles. Which is probably going to be their next offer during the appeal and has a decent chance of being accepted. "Win" for competition in cloud gaming in the UK I suppose.
Microsoft is not going to present such aggression by any means just because a UK regulatory body wants to show it has teeth.

- - - Updated - - -

It is not so straightforward.
The UK's CMA ruled that in cloud gaming, an emerging technology in which games are streamed Netflix-style, Microsoft plus Activision might become excessively dominant. Microsoft is already the biggest player in cloud gaming, with some two-thirds of the worldwide business. Control of Activision’s catalogue of hits might make it unassailable, the CMA said, adding that it doubted the effectiveness of ten-year deals in a new and fast-changing market.
The US and EU regulators seem to understand this point.
Ultimately, it depends on the best way to promote competition (ie, what is to the consumers interest), not monopoly.

Ultimately the point is problematic because Microsoft's dominance in cloud gaming has little to do with the catalogue and everything to do with the hardware and infrastructure. They aren't exactly stopping MS from gaining a near monopoly on that service in this way.

[jonnysensible]

wow lot of defenders of corporate monopolies in the thread

[Nymrohd]

wow lot of defenders of corporate monopolies in the thread

Honestly I just want to get rid of Kottick and have a bigger budget for my favourite game. On principle yeah, this is consolidation on a significant scale and it is problematic. At the same time, no one seems to give a fuck about consolidation in China, Korea and Japan so the game is lost anyway.