• Light/Dark

The Microsoft / Activision Blizzard acquisition |OT| Antitrust Simulator (completed; discussing post-merger issues)

ABK delisted from Nasdaq? FAQs and more
    • Sheepinator

    Sheepinator

    Member
    Jul 25, 2018
    28,254
    Idas Threadmark please.

    Wrt "Nasdaq delisting".

    The stock is not being delisted (yet?). On Monday, ATVI leaves the Nasdaq 100, to be replaced with Trade Desk.

    What does the delisting from the Nasdaq 100 mean?

    Funds, pensions, individuals, all commonly buy into ETF's, and all the boats in that fund benefit from that liquidity and buying pressure. Note that Trade Desk has been +5% to +6% all day so far, for that reason. If this merger weren't happening, ATVI would likely be down a similar amount.

    Was this instigated by the exchange or by ATVI?

    It doesn't make sense that it's the exchange choosing this. ATVI is far from the lowest market cap in the 100. It's double the market cap of EA for example. The exchange already has a scheduled rebalance in a week, and this is separate from that. The leaving date is also before the deal deadline date. Anything could theoretically happen next week, including the deal collapsing, ABK walking away any time after the 18th, etc. There is no reason I can think of for the exchange to jump the gun.

    -----------

    EDIT hours later:

    Barron's writer speculates it's Nasdaq deciding the merger is "highly probable" and therefore removing ATVI.

    -----------

    I also cannot think of why Kotick would choose this... unless the deal is being closed. See the first point above about liquidity.

    What is significant about the 17th?

    It's the first day after the FTC's TRO expires.

    Are they closing over the CMA?

    Maybe, but I doubt it. That would likely mean a fine of billions. I suspect they've come to an agreement with the CMA to close the deal, perhaps excluding the UK.

    Last night, LuLu said "the 39 countries where the merger can close."


    View: https://twitter.com/lulumeservey/status/1679279055613448195
     
    Last edited:
    • Countdown to the 9th Circuit response granting or denying the FTC's emergency motion
    • OP
    OP
    Idas

    Idas

    Antitrusting By Keyboard
    Member
    Mar 20, 2022
    2,090
    I think that this covers all the scenarios for the next 24 hours.

    Time that the Court of Appeals for the 9th Circuit has to respond to the FTC's Emergency Motion:

    1)     Granting an injunction pending appeal (MS/ABK would have to extend a few months the outside date);

    2) Extending the district court's TRO by issuing an administrative stay, to allow it more time to consider the motion
    (MS/ABK couldn't close during the weekend but maybe next week, if the FTC's emergency motion is finally denied);

    3) Denying the FTC's Emergency Motion (MS/ABK could close as soon as this weekend);

    4) Not saying anything during this time (MS/ABK could close as soon as this weekend).

    Jul 15, 2023 at 3:00 AM

    To be honest, on Monday I didn't expect this to end as a new season of "24" xD
     
    Last edited:
    • MS/ABK in talks to extend deal contract
    • FarSight XR-20

    FarSight XR-20

    Member
    Jan 4, 2018
    8,860
    NEW YORK (Reuters) - Microsoft Corp is in talks about an extension of its acquisition contract with video game maker Activision Blizzard, which is set to expire on Tuesday, so the parties can overcome the remaining regulatory hurdles to their $69 billion deal, a person familiar with the matter said on Monday.
    Click to expand...
    Click to shrink...

    The expiration of the contract would not automatically lead to the collapse of the deal, as it simply affords either company the right to walk away from the transaction.
    Click to expand...
    Click to shrink...

    Nonetheless, Microsoft has been seeking the contract extension to ensure that Activision is not wooed by another potential acquirer or has a change of heart, the source said.
    Click to expand...
    Click to shrink...

    news.yahoo.com

    Microsoft in talks to extend deal contract with Activision -source

    NEW YORK (Reuters) -Microsoft Corp is in talks about an extension of its acquisition contract with video game maker Activision Blizzard, which is set to expire on Tuesday, so the parties can overcome the remaining regulatory hurdles to their $69 billion deal, a person familiar with the matter...
    news.yahoo.com news.yahoo.com
     
    • FTC withdraws internal suit
    • vixolus

    vixolus

    Prophet of Truth
    Member
    Sep 22, 2020
    57,570
    • The CAT appeal officially adjourned
    • OP
    OP
    Idas

    Idas

    Antitrusting By Keyboard
    Member
    Mar 20, 2022
    2,090
    The CAT updated the status of the case with this:

    By an Order of the President dated 21 July 2023, the application made jointly by the CMA and by Microsoft – and with the support of Activision to adjourn the hearing of Microsoft's judicial review application (which is due to be heard on Friday 28 July 2023, with a time estimate of six days) was granted.

    They also published this:

    - Non-confidential version of the second witness statement of Mr Prevett (for the CMA)
    - Order of the President (Adjournment)

    Some highlights from the second witness statement of Mr Prevett (CMA):

    The CMA's duty under section 41(3) EA02 to assess whether there has been a material change in circumstances or special reasons not to adopt the proposed final order

    Third, as when exercising all its functions, the CMA is (and has always been) acutely conscious of the need to act in this matter in the public interest and having regard to the legitimate interests of individual citizens (whether natural or legal persons). The CMA made the Joint Application because it believes that there is a realistic chance of a more certain outcome more quickly that resolves its competition concerns and protects consumers, whilst allowing a modified form of the transaction to go ahead.

    On 26 June 2023, Microsoft submitted a 20-page response to the CMA's consultation on the proposed order (the "Microsoft Submission") [CP2/2/3], in which it argued that there was a material change of circumstance or special reason to make a different form of order from that set out in the Final Report under section 41(3) EA02. In my experience, submissions of this nature are very rare given the high legal standard to meet any test for material change of circumstance or special reason under s.41(3) EA02 (as exceptions to a legal duty), and the relatively short period between the publication of a final report and the making of the final order. That is not to say that, notwithstanding a high legal standard, certain developments arising after a final report will not be capable of amounting to an arguable material change of circumstance or special reason.

    First, Microsoft relies on the fact that, on 15 May 2023, the European Commission issued a decision approving the Merger that had been notified to the Commission on the condition that Microsoft complies with legally-binding commitments offered to the Commission on 20 April 2023. Microsoft explains that (amongst other things):

    a) The commitments require Microsoft to grant royalty-free, worldwide licenses to stream Activision games for a period of ten years from the closing date of the Merger on the terms set out in the commitments. Microsoft submits that the commitments also require it to comply with the agreements that it has entered into with NVIDIA, Boosteroid and Ubitus (which are addressed in the Final Report).

    b) The commitments are supported by a monitoring and enforcement regime, including a fast-track resolution regime if any cloud gaming providers consider Microsoft is failing to comply with its obligations and significant adverse consequences for Microsoft if it is found to have breached its commitments.

    The Microsoft Submission contends that these commitments fundamentally change the factual basis on which the assessment of the cloud gaming agreements was conducted in the Final Report, including in particular as to the level of certainty that they provide. Microsoft's position is that the commitments therefore constitute a material change of circumstance and, separately, a special reason to depart from the Final Report (particularly in light of the requirements of comity).

    Second, Microsoft relies on the fact that the terms of the proposed order are far-reaching and provide for restrictions which are unnecessary to prevent a SLC arising in relation to cloud gaming services in the UK. In particular, Microsoft argues that it is disproportionate for prohibition to extend to: (i) the acquisition by Microsoft of an interest in all subsidiaries of Activision (in particular Activision's King segment, which is focused on native mobile games); and (ii) the acquisition by Activision of all subsidiaries of Microsoft (the vast majority of which have no gaming activities and most of which have no activities in, or connection to, the UK).

    Third, as discussed at the CMC on 17 July 2023, on 16 July 2023, various media outlets reported that Sony had signed an agreement with Microsoft providing access to Call of Duty following the Merger. I understand, based on the oral submissions of Microsoft's leading counsel at the CMC on 17 July 2023, that Microsoft considers that this constitutes a further material change of circumstance or special reason.

    At the time of filing this statement, the CMA has not seen a signed version of the Sony Agreement.     I have, however, read the statement of REDACTED dated 19 July 2023, which outlines the terms of the Sony Agreement. The Inquiry Group will of course consider any such materials in connection with its assessment of the appropriate form of final order under s.41 as and when they are received.

    Fourth, as the Tribunal is also aware, the CMA expects to receive a notification from Microsoft for a restructured deal to acquire Activision. Once any notification is made, it is possible Microsoft may submit that the restructured deal can amount to a further material change of circumstance or special reason.

    The CMA's assessments under s.41(3) and s.33(1) EA02 may well therefore take place in parallel. They would be distinct insofar as: (1) the CMA must consider whether there is a material change of circumstance or special reason under s.41(3) on the grounds set out above; and (2) as explained at the hearing on 17 July 2023, the CMA may still consent to Microsoft acquiring an interest in Activision under the terms of the proposed final order.

    Whilst further investigation would be required, it is arguable that the matters outlined above may give rise to a material change of circumstance and/or special reason under s.41(3). Ultimately, any decision would be for the Inquiry Group. The Inquiry Group extended the statutory timetable for making a final order in order to give full and proper consideration to Microsoft's submissions on the draft final order. Nothing in this statement is intended to prejudge either the Inquiry Group's consideration of the representations made by the parties and third parties or its final decision.

    Third party consultation on any changes to the proposed order

    Given the Inquiry Group has received a submission from Microsoft that there has been a material change of circumstance or there are otherwise special reasons for the final order to depart from the Final Report, recognising the request of the President of the Tribunal in paragraph 15(3) of the Ruling about the need for third parties to have an opportunity to comment on the submissions put forward by Microsoft, the Inquiry Group has approved that the CMA should publish details regarding Microsoft's submissions as soon as possible and provide a short window for third party submissions.

    Further, if the Inquiry Group reaches the provisional view that there has been a material change of circumstance, or there are otherwise special reasons for modifying the proposed order, the CMA would give notice of the modified order in accordance with the requirements paragraphs 2(4) to 2(6) of Schedule 10. The CMA would set out the proposed modifications and the reasons for them and give third parties a chance to respond. Whilst it will be for the Inquiry Group to determine the precise process to be followed, and this will depend on the progress of any further evidence gathering, my current expectation is that the Inquiry Group may be able to reach a provisional view in the week beginning 7 August 2023. Third parties would then have a period of 7 days to make representations.

    Why the first adjournment application did not refer to Microsoft's proposal to modify the transaction

    In its application of 28 June 2023, the CMA sought an adjournment on the basis that: (i) the CMA had not at that time been able to instruct leading counsel with previous experience of this matter to appear at the substantive hearing and had encountered significant difficulty in obtaining suitable alternative representation; (ii) First Treasury Counsel, who had been instructed as leading counsel for the CMA, had confirmed that it was not possible for the CMA's case to be prepared and presented effectively on the current timescales with a hearing at the end of July; and (iii) there had been a range of other developments in relation to the proceedings which either had already, or would soon, divert significant resources of the CMA away from the preparations for the hearing, including an increase in the scale of work that would be involved in relation to the consultation procedure on the final order.

    This application did not refer to discussions between Microsoft and the CMA about a modified transaction because the adjournment was not sought in order to pursue any such discussions.     On 28 June 2023, there were no ongoing discussions between Microsoft and the CMA. An adjournment was instead sought on the distinct basis that it was necessary to secure a fair hearing, for the reasons summarised above.

    The CMA's application of 28 June 2023 was opposed by Microsoft and refused by the Tribunal in a ruling on 29 June 2023. In the light of that ruling, the CMA made arrangements to put together a counsel team (including by moving counsel away from other cases, as explained in a letter to the Tribunal dated 5 July 2023). The Joint Application was made on the distinct basis from the first application for adjournment, as explained in the parties' submissions at and in advance of the CMC on 17 July 2023.

    Extent to which the FTC's failure to obtain an interim injunction from the US courts is relevant to the Joint Application

    The FTC's failure to obtain a preliminary injunction was irrelevant and immaterial to the CMA's decision to participate in the Joint Application. The CMA's decision was taken on the basis of its assessment that the public interest is now best served by an adjournment for the reasons outlined at the beginning of this statement. The CMA believes that there is a realistic chance that the adjournment will lead to an outcome that is in the interests of consumers, and that gives the parties (and the public) greater certainty more quickly, without the cost and delay of litigation.

    While the CMA cannot comment on whether or not the US developments were a relevant consideration for Microsoft in deciding whether to make the Joint application, as this is a matter for Microsoft, I confirm the US developments were irrelevant to the CMA's decision to participate in the Joint Application.

    There are not more upcoming events.

    Now, time to focus on the new deal.
     
    Last edited:
    • Summary of the EC decision
    • OP
    OP
    Idas

    Idas

    Antitrusting By Keyboard
    Member
    Mar 20, 2022
    2,090
    My highlights from the EC (European Commission) decision (256 pages).

    This is PART 1. You can find PART 2 here, and PART 3 here.

    MS expects to reach (part) of the famous 3 billion consumers by 2030 (page 9)

    Gaming is a highly dynamic industry, and the fastest growing portion of the media and entertainment sector. It is larger than pay-TV, home video (including streaming), cinema, music, books or newspapers & magazines. Today, 3 billion consumers around the world play games, a number that the Notifying Party expects to reach [REDACTED] by 2030. Gamers are able to access and play thousands of highly differentiated games on a variety of devices, including PCs, gaming consoles, and mobile devices.

    Originally, it looks like MS thought about releasing xCloud through white-label services (page 11, footnote 18 about white-label services)

    Prior to the launch of cloud game streaming, Microsoft considered the possibility of [business secrets concerning business strategy]. This would entail [business secrets concerning Microsoft XCloud strategy]. Microsoft has had preliminary discussions with [business secrets concerning business strategy]. Microsoft offers publishers the option to appear as channels within Game Pass (e.g., EA Play). Further investment would be required in order for Microsoft to be able to offer white-label services to third parties from a technical perspective.

    MS is still selling Xbox at a loss (page 13, footnote 24)

    From this viewpoint, singling out the sale of console hardware as a standalone activity is not meaningful for the purpose of the present Decision. In this regard, the Notifying Party submitted that "Microsoft's Xbox console is sold at a loss, and to the best of the Parties' knowledge this is the case for other consoles as well. This is because all console vendors expect to recoup (at least some) of this loss from the sale of games and services to the new console owner." As the Transaction at hand does not concern such products, the Commission does not assess the market for the supply of gaming hardware alone, and potential vertical relationships connected to it.

    The EC didn't consider cloud gaming a relevant element to asses the market of developing and publishing games (page 15, footnote 41)

    The Commission notes that video games can also be distributed via cloud game streaming. However, the Commission does not consider cloud game streaming as a relevant element for the assessment of the market for the development and publishing of video games. This is because cloud game streaming does not provide a different content from what is available for download. In principle, as regards PC and console games, all games available for download can also be played via cloud game streaming without the relevant game developer having to adapt it. As regards the Xbox console, for example, Microsoft explains that [business secrets concerning game development].

    The EC concluded that mobile does not belong to the same market as developing and publishing for PC/console; there was no further segmentation by console and PC (pages 17 - 18)

    In light of the above, for the purposes of this Decision, the Commission concludes that the development and publishing of mobile games does not belong to the same product market as the development and publishing of PC and console games, respectively.

    Moreover, the Commission concludes that the product market definition can be left open with regard to a segmentation based on platform between PC and console, as the outcome of the analysis will be the same regardless of whether the Commission considers an overall market for game development and publishing of PC and console games, or potential separate markets for the development of (i) PC; and (ii) console games, respectively.

    The EC's findings indicated that when gamers start playing a newly released game, they spend less time playing other games of the same genre; therefore substitution across genres is uncommon and a segmentation by video game genre is appropriate (pages 18 - 19)

    During the Phase II market investigation, the Commission has investigated whether the market for the development and publishing of video games should be segmented by genre and whether such segments constitute separate product markets or should be considered part of one differentiated product market.

    In Annex 44 of the Article 6(1)(c) Response, the Notifying Party argues that (i) there is no agreed-upon classification of games into genres in the gaming industry; (ii) most gamers play games in multiple genres; (iii) gamers' playing choices change over time; (iv) when gamers start playing a new game, they decrease game time across games of all genres; and (v) gamers' tastes are heterogeneous. Taken together, according to the Notifying Party, these findings show that there are no clear boundaries between genres and that gamers are likely to substitute between games within and across genres.

    The majority of the arguments brought forward in Annex 44 of the Article 6(1)(c) Response are based on the Notifying Party's analysis of "telemetry" data that tracks the game time on Xbox devices of a sample of almost […] gamers.

    The Commission considers that the Notifying Party's analysis of the telemetry data that is presented in Annex 44, has several shortcomings. Most importantly, the Notifying Party's submission that when gamers start playing a new game, they spend less time playing other games across all genres, indicating substitution within and across genres, does not hold up under further examination. First, the evidence provided by the Parties is presented in purely visual form. It is therefore difficult to assess whether the Parties' claim actually holds in quantitative terms. Second, new game titles are released on Xbox very frequently, making it difficult to distinguish the impact of one release from another when they are released in close proximity.

    (70) The Commission provides an alternative examination of the telemetry data using a more robust methodology that addressees these concerns. Specifically, the Commission uses a so-called 'difference-in-differences' methodology that compares the change in game time between gamers who did and who did not play the newly released title. This approach allows to estimate the causal effect of the new release on game time, while controlling for any other factors that may have affected the outcome. Contrary to the Notifying Party's submissions, the Commission's findings indicate that when gamers start playing a newly released game, they mostly spend less time playing other games of the same genre. That is, substitution mostly takes place within genres while substitution across genres is substantially less frequent. This indicates that at least a segmentation of the market for game development and publishing by genre would be appropriate.

    The EC concluded that the relevant product market is the one for the development and publishing of PC and console games, but game development and publishing is highly differentiated by genres; however, the EC left open the possibility of further segmentation by 7 genres due to the nuances of the market (pages 19 - 20)

    In its Phase I market investigation, the Commission asked market participants to list the main video games (i.e., the top five particularly representative or popular titles) that belong to each of the following genres: (i) action and adventure; (ii) shooter/battle royale; (iii) role-playing games; (iv) sports (including racing and flying, respectively); (v) fighting; and (vi) strategy. The Commission also asked market participants to indicate a given title under all genres that apply, should they consider that the title belonged to more than one genre.

    The replies to those questions confirmed that battle royale is part of the shooter genre and that racing is a genre separate from sports. In its Phase II Market Investigation, the Commission therefore listed seven genres, giving the top 5 games for each genre as listed by market participants in Phase I as an example. It asked market participants whether they considered it appropriate to distinguish between such genres, both for console63, and for PC games.

    The answers of market participants to the Phase II market investigation are nuanced. While some market participants submit that they do not consider a segmentation by genre meaningful, for each of the seven genres a clear majority of the respondents which expressed a view indicated it to be appropriate to distinguish the respective genre from the others. Only a few respondents suggested in their answers that certain games should be allocated to other genres or that other games should be mentioned as representative for the suggested genres.

    Moreover, the respondents indicated in their answers that most often games within the suggested genres compete with each other, whereas games across genres compete less often. However, based on the replies to the market investigation, a degree of across-genre competition still exists.

    Overall, the replies of the market participants indicated that the level of substitution between one genre and another significantly depends on the specific genres examined. The genres "action & adventure" and "role-playing" are considered significantly more substitutable between each other than, for example, "action & adventure" with "sports" or "fighting". Games in the "shooter" genre are considered to a slightly lower degree substitutable with games in the "action & adventure" genre compared to the degree of substitution between "action & adventure" and "roleplaying", but significantly less so with "sports", "fighting" or "strategy" games. Overall, "action & adventure" and "role-playing" games seem to be close substitutes, as occurs with "sports" and "racing" games, whereas "fighting" and "strategy" games each have no other genre that is considered substitutable by a significant number of respondents.

    The Commission received mixed evidence also on the feasibility of switching genres for developers. On these topics, the Commission received similar replies for console games and PC games.

    Based on the results of the market investigation, the Commission considers that the market for game development and publishing is highly differentiated on the basis of game genres. In this regard, genres constitute an important distinguishing factor between video games that affects to a certain degree the level of competition between them. However, there exists some uncertainty as to whether such differentiation allows to conclude that all or certain game genres form separate product markets from other genres.

    In light of this, for the purposes of this Decision, the Commission concludes that the relevant product market is the market for the development and publishing of PC and console video games. The Commission considers that it can be left open whether this market should be further segmented based on game genres, in particular based on the following genres: (i) action and adventure; (ii) shooter (including battle royale); (iii) role-playing games; (iv) sports; (v) racing; (vi) fighting, and (vii) strategy, as this would not change the outcome of the competitive assessment in this case.

    The EC concluded that segmentation based on type of game (AAA or non-AAA) could be left open (page 21)

    The results of the Phase I market investigation were inconclusive regarding a possible segmentation of the video game publishing product market by type of video game (AAA games vs. non-AAA games).

    From the supply-side, the majority of market participants that expressed a view submitted that game developers focusing on AAA can easily switch to developing a non-AAA game in a short period of time and with minimal costs, while the opposite is not necessarily the case.

    However, market participants were not entirely aligned on this point. For example, one market participant stated that also switching from developing AAA to developing non-AAA games can be challenging, even if still to a lesser extent than vice-versa: "switching from AAA to a non-AAA development might be challenging as it requires scaling down (plans, team, budget), however it is much easier than the vice-versa situation." On the contrary, a few market participants indicated that both switching from developing AAA games to developing non-AAA games and viceversa is possible in a short period of time and with minimal costs.

    For the purposes of this Decision, the Commission concludes that the relevant product market is the market for the development and publishing of PC and console video games. The Commission considers that the question whether this market should be further segmented based on game types can be left open, as this would not change the outcome of the competitive assessment in this case.

    The EC concluded that segmentation based on payment model (buy to play or subscription) wasn't appropriate in the case (page 26)

    The majority of respondents that expressed a view on this subject during the market investigation submitted that the market for game distribution should not be segmented by payment model (buy-to-play vs subscription services). In particular, from the demand-side, the majority of respondents considered that multi-game subscription services and digital storefronts selling games on a buy-to-play basis compete with each other and belong to the same market for (digital) distribution of games. From the supply-side, market participants provided mixed views as to whether a video games distributor selling games on a buy-to-play basis can switch to offering a viable multi-game subscription service in a short period of time and with minimal costs, and vice-versa.

    In light of the above, for the purposes of this Decision, the Commission concludes that the market for game distribution should not be segmented based on payment model.

    The EC concluded that segmentation based on type of access to video games (downloading vs cloud gaming) wasn't appropriate in the case (pages 26-27)

    During its market investigation, the Commission asked market participants to provide their views with regard to the status quo in the market. The results of the market investigation indicated that the market for game distribution should not be segmented based on the type of access to video games (downloading vs. cloud game streaming).

    In particular, from the demand-side, the majority of respondents considered that cloud game streaming services compete with the more traditional access to video games via download, as cloud game streaming constitutes just a different method to access the games.

    In light of the above, for the purposes of this Decision, the Commission concludes that the relevant market is an overall market for PC and console video game distribution and that this market should not be segmented based on type of access.

    If there was any doubt, MS is moving away from per-game monetization to a flat-fee subscription model (page 29)

    The Notifying Party submits that, by acquiring Activision Blizzard, Microsoft enhances the attractiveness of Microsoft's multi-game subscription service Game Pass by adding Activision Blizzard's popular games to its library, as Microsoft undertakes to move from per-game monetization to a flat-fee subscription model. Microsoft expects the Transaction to improve Game Pass' user engagement and increase its subscriber base, allowing Microsoft to continue investing in Game Pass and cloud gaming functionality.

    The 3 largest franchises from ABK in 2021 for PC and console (page 30)

    Activision Blizzard's three largest franchises in 2021 in terms of revenues on PC and console were World of Warcraft, Call of Duty, and Diablo for PC, and Call of Duty, Crash Bandicoot, and Diablo for consoles.

    The EC received complaints regarding Microsoft's supply of physics engines (Havok) but considered that there was no theory of harm specific to the merger (page 34, footnote 139)

    The Commission has received complaints also as regards Microsoft's supply of physics engines, a type of software that allows computers to create physics phenomena such as rigid and soft body dynamics and fluid dynamics to reproduce the real-world situation. Such engines are critical for the development of video games with complex 3D physical characteristics. According to such complaints, postTransaction Microsoft would have increased incentives to require developers to use its Havok physics engine, and to degrade Havok's compatibility with competing gaming platforms that currently use Havok, thereby harming competition in the market for the provision of such physics engines. The Commission considers that such possible theory of harm is not merger specific, as Activision Blizzard's games does not carry out any activities that are horizontally or non-horizontally linked to the provision of physics engines. Therefore, the Transaction does not bring about any change in the ability and incentive for Microsoft to foreclose Havok's competitors. In light of this, the Commission has not assessed in this Decision the possible effects of the Transaction in the market for the provision of physics engines.

    The EC received complaints regarding Microsoft's Jumpstart programme (a Windows license rebate) but considered that there was no theory of harm specific to the merger (page 35, footnote 140)

    The Commission has received complaints also as regards Microsoft's Jumpstart programme. Jumpstart is a programme under which Microsoft grants PC manufacturers a […] Windows license rebate if they fulfil certain requirements (mainly consisting of the pre-installation of certain Microsoft apps, programs, software etc). According to the complaint received, the requirements imposed by the Jumpstart programme make it difficult for Microsoft's competitors offering similar apps and programs to compete fairly vis-à-vis PC manufacturers. Post-Transaction, Microsoft could expand the game related requirements to Jumpstart, especially by adding the Xbox app and Game Pass, thereby reducing the ability of rival gaming platforms to enter into promotional arrangements and to compete with Microsoft's gaming channels. The Commission considers that such possible theory of harm is not merger specific. Not only Microsoft could already implement such strategy, but the Transaction would not bring about any change in Microsoft's ability or incentive to foreclose competitors. Game Pass already allows to download games on Windows PCs only, and Game Pass Ultimate's cloud game streaming feature remains accessible as a web app via browser regardless of its integration into the Jumpstart programme. The Commission has assessed in Section 7.5.3 below Microsoft's ability and incentive to make Game Pass Ultimate's cloud game streaming feature no longer accessible on rival PC OS, as well as the effects of such strategy on competition. In light of this, the Commission has not assessed in this Decision the possible effects of the Transaction in relation to the possible foreclosure of rival distributors of video games due to the Jumpstart programme.

    The EC received complaints regarding the provision of cloud gaming services (PlayFab and Azure) but considered that there was no theory of harm specific to the merger (page 35, footnote 141)

    The Commission has also received complaints that the Transaction will harm competition on the market for the provision of cloud services. In particular, Microsoft is active in the provision of cloud services through its Azure business, and it also operates PlayFab, a back-end service that allows developers to use Azure to build and operate games, as well as to analyze gaming data. According to the complaints, Activision Blizzard's games will enhance the importance of Microsoft's cloud game streaming service, therefore post-Transaction Microsoft will have increased incentives to require developers to use PlayFab and Azure in order to develop games for cloud game streaming, especially for distribution via Microsoft's Game Pass Ultimate. The Commission considers that such possible theory of harm is not merger specific, as Activision Blizzard is not active in the supply of any cloud-related services that create competitive links with Microsoft's supply of PlayFab, nor that would change Microsoft's offering post-Transaction. In light of this, the Commission has not assessed in this Decision the possible effects of the Transaction in relation to the foreclosure of rival providers of cloud services.

    MS is a small player in the market of development and publishing of AAA games (page 39)

    The market share information shows that Microsoft is a small player in the market of development and publishing of AAA games, across all platforms and geographical segmentations. Its market shares in 2022 were equal or below [0-5]%, with the exception of console [0-5]% and PC and console [0-5]% worldwide only.

    In the EEA, ABK has been losing marketshare in the development and publishing of AAA games on console since 2020 (page 39)

    While Activision Blizzard's shares by revenue were consistently below [5-10]% in 2022, with the exception of console worldwide ([10-20]%), the Commission notes that Activision Blizzard has managed to consolidate its position as an important video games' publisher worldwide. In the EEA, Activision Blizzard's share of the market has progressively decreased, going from [10-20]% in 2020 to [5-10]% 2022 on PC and from [5-10]% to [0-5]% in the same period on console. Accordingly, the same trend is observable in the Parties' combined shares across all platforms and for PC and console together.

    Tencent and Valve are the largest players in development and publishing on AAA PC video games by revenue (page 40)

    Tencent and Valve are the largest players in development and publishing on AAA PC video games by revenue, followed by a wide range of smaller players, with shares around (EA and Embracer in the EEA) or below [10-20]%.

    EA and Nintendo are the largest players in development and publishing on AAA console video games by revenue (page 40)

    On console, EA is the market leader both globally ([20-30]%) and in the EEA ([20-30]), with Nintendo ranking second. EA's shares have increased since 2020, while Nintendo's have declined both globally and, to a lesser extent, in the EEA. As for console, besides EA and Nintendo, the market is divided between a long tail of small players.

    EA and Tencent are the two largest players worldwide by revenue in development and publishing on AAA console and PC video games (page 40)

    Finally, when we look at the broader market segmentation of PC and console, EA and Tencent are the two largest players worldwide by revenue ([10-20]% and [10-20]%), closely followed by the Parties, with a combined share in 2022 of [10-20]%. In the EEA, the difference that separates the first player, EA, and the second, Valve is larger, with a share gap of around [0-5]%. The Parties account for [5-10]% of the total market by revenue (with a declining trend over the 2020-2022 time period).

    Microsoft is a small player in the development and publishing of AAA games with role playing elements on PC, ABK is Top 3 worldwide; NetEase and Nexon are numbers one and two; Embracer and Tencent are large players in the EEA (pages 40 - 41)

    The market shares information shows that Microsoft is a small player in the development and publishing of AAA games with role playing elements on PC, with [0-5]% globally and [0-5]% in EEA in 2022. Moreover, Microsoft's market share has decreased in the period from 2020 to 2022 both globally and in EEA. However, Activision Blizzard is one of the top-3 players worldwide, accounting for [10-20]% of the market total revenues in 2022. Despite a decline from [30-40]% in 2020 to [30-40]% in 2022, Activision Blizzard is the first player in the EEA. The Parties' combined higher share in the EEA, [30-40]% compared to [10-20]% in 2022 worldwide, are due to a lower penetration of publishers like NetEase and Nexon in the EEA, that are the first ([20-30]%) and second ([10-20]%) largest players in the worldwide market. Nevertheless, the Parties in the EEA compete against two large players, Embracer ([30-40]%) and Tencent ([10-20]%). Their rapid growth — Embracer especially in two years has more than doubled its shares — overlaps with the Parties' decrement.

    Embracer is the largest player in the market for developing and publishing on PC and console of AAA games with flying and racing elements; MS/ABK would be second worlwide and in the EEA (page 42)

    Within the narrow market of AAA games with flying and racing elements, Activision Blizzard's share estimated to be around [0-5]% on PC and, respectively, [0-5]% globally and [0-5]% in the EEA on console in 2022. On the other hand, Microsoft has a market share on PC of [20-30]% worldwide and [10-20]% in the EEA, while on console the shares decrease to [10-20]% and [10-20]%.

    Embracer is the largest player in the market for developing and publishing on PC and console of AAA games with flying and racing elements, who has more than doubled its market shares, going from [10-20]% in 2020 to [20-30]% 2022 globally and from [20-30]% to [40-50]% in the EEA. The Parties' combined share amounts to [20- 30]% worldwide and [10-20]% in the EEA in 2022, granting the Parties the role of second biggest player worldwide and EEA-wide.

    MS/ABK would lead the market regarding the development and publishing of AAA action and adventure games by revenue; Sony, Nintendo or Epic would be alternatives (page 43)

    On the market for development and publishing of AAA games with action and adventure elements on console, Microsoft has a market share by revenue of [0-5]% worldwide and [0-5]% in the EEA in 2022. Activision Blizzard's market shares by revenue have increased from [10-20]% in 2020 to [20-30]% in 2022 worldwide, while they have consistently decreased in the EEA, from [10-15]% in 2020 to [10- 20]% in 2022. On the market for development and publishing of AAA games with action and adventure elements on both console and PC, Microsoft's market share by revenue is below [0-5]% worldwide and below [0-5]% in the EEA. Similarly to the console market, Activision Blizzard's market shares by revenue have increased from [10-20]% in 2020 to [10-20]% in 2022 worldwide, while they have consistently decreased in the EEA, from [10-20]% in 2020 to [5-10]% in 2022.

    Other players in the market are Epic Games with market shares by revenue of [5- 10]% and [10-20]% in 2022 worldwide and in the EEA respectively and     Sony with market shares by revenue of [5-10]% and [0-5]% in 2022 worldwide and in the EEA. The majority of the market is split between other smaller competitors.

    MS/ABK would lead the market regarding the development and publishing of AAA shooter console video games by revenue; Epic or EA would be alternatives (page 43)

    In the market for development and publishing of AAA shooter console video games, the Parties' share of the market by revenue was [30-40]% worldwide and [10-20]% in the EEA. Activision Blizzard accounts for [30-40]% and [10-20]% of the market worldwide and EEA-wide, respectively. On the other hand, Microsoft represented only [0-5]% of the total market revenues globally and [0-5]% in the EEA.

    Other developers and publishers with notable market shares by revenue are Epic Games and EA with more than [10-20]% market share by revenue worldwide and in the EEA. Other smaller players comprise the remaining [40-50]% of the market in the EEA and [20-30]% worldwide.

    In the distribution of PC and console video games: Sony leads on console, Valve is the strongest player, NetEase is big worldwide but inactive in EEA (page 45)

    With respect to shares by revenue for overall video games distribution, the market information shows that Microsoft is a small player across PC games both globally and in the EEA, while its shares on console in 2022 were [20-30]% worldwide and [20-30]% in the EEA. In the EEA, Microsoft has increased its shares for console video games from [10-20]% in 2020 to [20-30]% to 2022. In the same time period, Sony has experienced a decline in its EEA shares, from [60-70]% to [60-70]%. Nevertheless, Sony still holds a leading position in the market of overall games distribution on console both globally and in the EEA. The third largest player is Nintendo that has maintained its market share in the last three years and currently accounts for [10-20]% of the total market.

    On PC, the Parties' combined shares in 2022 accounted for [10-20]% both in the EEA and worldwide. The two geographical markets differ when it comes to competitors and their presence in the market. Valve Corporation is the strongest player in both but its shares in the EEA are substantially higher ([40-50]%) compared to its share worldwide ([20-30]%). Furthermore, a China-based firm, NetEase, appears to be inactive in the EEA market for overall games distribution, while its shares globally account for [10-20]% of the total market.

    Finally, by taking into account both platforms together, the Patties' combined share in 2022 was [20-30]% worldwide and [10-20]% in the EEA. Microsoft contributes to most of it, while Activision Blizzard's shares cover less than [0-5]% of the total market. For what concerns competition, Sony still holds a leader position, with [20- 30]% shares worldwide and [30-40]% in the EEA. Sony is then followed by Microsoft globally ([10-20]%) and by Valve Corporation in the EEA ([20-30]%).

    In 2022, MS/ABK combined market share exceeded 20% by revenue (either on a worldwide or EEA-wide level) in 5 markets (page 46) | Those were the markets assessed by the EC in this case

    Based on the market shares by revenue in 2022 provided by the Notifying Party, the Commission has identified five product market segments where the Parties' combined market share exceeds 20% by revenue in 2022 either on a worldwide or EEA-wide level:

    (a) Development and publishing of AAA Role Playing video games on PC (EEA);

    (b) Development and publishing of AAA Racing and Flying video games on: (i) PC and console (worldwide); (ii) PC (worldwide); and (iii) console (worldwide);

    (c) Development and publishing of AAA Action and Adventure video games on: (1) PC and console (worldwide); and (ii) console (worldwide);

    (d) Development and publishing of AAA Shooter video games on console (worldwide); and

    (e) Distribution of video games on PC and console (worldwide).
     
    Last edited:
    • MS submits new proposal; CMA opens new review process, deadline is October 18th
    • bsigg

    bsigg

    Member
    Oct 25, 2017
    22,763

    View: https://twitter.com/BradSmi/status/1693866142702653802?t=-VGGhmGYXfp0exEsWvq9fw&s=19

    This includes executing an agreement effective at the closing of our merger that transfers the cloud streaming rights for all current and new Activision Blizzard PC and console games released over the next 15 years to Ubisoft Entertainment SA, a leading global game publisher. The rights will be in perpetuity.
    Click to expand...
    Click to shrink...


    Under the restructured transaction, Microsoft will not be in a position either to release Activision Blizzard games exclusively on its own cloud streaming service—Xbox Cloud Gaming – or to exclusively control the licensing terms of Activision Blizzard games for rival services
    Click to expand...
    Click to shrink...

    The agreement provides Ubisoft with a unique opportunity to commercialize the distribution of games via cloud streaming. The agreement will enable Ubisoft to innovate and encourage different business models in the licensing and pricing of these games on cloud streaming services worldwide.
    Click to expand...
    Click to shrink...
     
    • Response from ABK about the new proposal to the CMA
    • Theorry

    Theorry

    Member
    Oct 27, 2017
    62,263
    F4HTypGW8AAo_-N
     
    • Possible distribution of cloud gaming rights if the deal is approved
    • OP
    OP
    Idas

    Idas

    Antitrusting By Keyboard
    Member
    Mar 20, 2022
    2,090
    Idas said:
    I think that we are going to be here for a while (new info from the Financial Times):

    #TeamOctober :p xD
    Click to expand...
    Click to shrink...

    Although the original article has been updated since then, MS knew since day one after the pause (July 12th) that this was a #TeamOctober play:

    One person familiar with the negotiations suggested that the CMA and the companies would now enter a three-month period of talks. The person said there was a period of time "to discuss what the CMA really wants", adding that it was "way too early to speculate what's on the table".
    Click to expand...
    Click to shrink...

    The Financial Times also knew about it but maybe MS wasn't happy about the info been shared so soon and that's why the article was changed.

    Anyway, very interesting development. And lots of complexity to manage the cloud gaming rights for MS and ABK in the future.

    If I got all the info right, this would the situation in October (if the deal is approved):

    - Xbox Studios (XGS) and Bethesda games can be on PC, console (they can be exclusive) and Xcloud (they can be exclusive too, excluding the agreements that MS has signed with Nvidia, Boosteroid, Ubitus, Nware and EE).

    - ABK games can be on PC and console (they could be exclusive to Xbox). The cloud gaming rights are sold to Ubisoft worldwide. Ubisoft will also receive
    a non-exclusive licence for Activision's EEA cloud gaming rights to enable it to stream and sub-license streaming of Activision games in that region. At the same time, in the EEA countries MS will receive from Ubisoft a non-exclusive licence to comply with the EC commitments and certain existing third party agreements.

    - In addition to that, in the EEA countries, and for 10 years, MS/ABK would license the cloud gaming rights to Nvidia, Boosteroid, Ubitus, Nware and EE (according to the EC commitments).

    - In the rest of the world (that would include countries like Australia, Canada or even the US, where regulators still have concerns about the deal), Ubisoft would commercialise the cloud gaming rights of ABK games for 15 years. MS, Sony, Nintendo or whoever would have to negotiate with them. The games could be on xCloud but MS would have to pay Ubisoft. I guess that Nvidia, Boosteroid, Ubitus, Nware and maybe EE could be excluded from this due to the previous commercial agreements with MS, that I guess were worldwide (maybe the one with EE was for UK only).

    - MS has to develop special versions of the ABK games (for example, a Linux version) if Ubisoft wants to license the games to non-Windows cloud gaming providers. That special version should also have to be provided to the EEA cloud gaming providers, according to the commitments with the EC.

    - MS would get money from Ubisoft through the usage of the games + the initial payment.

    - By 2033, MS/ABK would regain the cloud gaming rights in the EEA countries. By 2038, MS/ABK would regain the cloud gaming rights worlwide. Ubisoft would keep the cloud gaming rights of all the games managed during those 15 years.

    - By 2033 in the EEA countries and 2038 in the rest of the world, any cloud gaming agreements would have to be renegotiated and MS/ABK could decide to terminate them.

    In summary:

    - This new deal sounds like the CMA "won" from a regulatory perspective and that the EC "lost" (for example, the EC said that MS didn't have to develop versions for non-Windows cloud providers but now they are accepting that request).

    - I don't know if the EC is going to be happy about this new deal, even if it respects the final commitments. The CMA rejecting again the importance of the EU commitments in the final decision related to the change of circumstances/special reasons is going to feel like a new attack to their approach (accepting behavioural remedies when MS was ready to divest the IP). Because in the end MS is (indirectly) admitting that they could have accepted the same divesture for the EEA countries.

    - This puts Ubisoft in a very interesting position for any future investment/acquisition.

    - The big winners of this whole deal are the lawyers and law firms who will have to manage all the incredible legal complexity :p xD
     
    Last edited:
    • The EC assessing possible new review of the proposal made by MS to the CMA
    • OP
    OP
    Idas

    Idas

    Antitrusting By Keyboard
    Member
    Mar 20, 2022
    2,090
    New report from MLex (I told you that the EC wasn't going to be happy):

    - Microsoft's restructuring of its acquisition of Activision Blizzard to win UK approval will see the European Commission assess whether a fresh EU notification is necessary.

    - Microsoft believes the divestment of cloud-gaming rights to Ubisoft outside of Europe will allow it to respect EU commitments adopted in May, but officials are now studying if a new review by the EU merger regulator is needed. "The commission is carefully assessing whether the developments in the UK require another notification to the commission," a spokesperson for the EU authority said.


    Are you ready for a new CMA and EC merger review? :p xD

    MS says that everything is fine, but we'll see...
     
    • Preliminary approval from the CMA
    • OP
    OP
    Idas

    Idas

    Antitrusting By Keyboard
    Member
    Mar 20, 2022
    2,090
    Preliminary approval from the CMA:

    The CMA considers that the restructured deal makes important changes that substantially address the concerns it set out in relation to the original transaction earlier this year.

    In particular, the sale of Activision's cloud streaming rights to Ubisoft will prevent this important content – including games such as Call of Duty, Overwatch, and World of Warcraft – from coming under the control of Microsoft in relation to cloud gaming. The CMA originally found that Microsoft already has a strong position in cloud gaming services and could have used its control over Activision content to stifle competition and reinforce this position. The new deal instead results in the cloud streaming rights for Activision's games being transferred to an independent player, Ubisoft, maintaining open competition as the market for cloud gaming develops over the coming years.

    While the restructured deal is materially different to the previous transaction and substantially addresses most concerns, the CMA has limited residual concerns that certain provisions in the sale of Activision's cloud streaming rights to Ubisoft could be circumvented, terminated, or not enforced.

    To address these concerns, Microsoft has offered remedies to ensure that the terms of the sale of Activision's rights to Ubisoft are enforceable by the CMA. The CMA has provisionally concluded that this additional protection should resolve those residual concerns.

    The CMA has now opened a consultation, until 6 October, on Microsoft's proposed remedies.

    - Press release: New Microsoft/Activision deal addresses previous CMA concerns in cloud gaming
    - Summary of Phase 1 decision (4 pages)
    - Full text decision (30 pages)
    - Decision related to the acceptance of the remedies proposed by MS (6 pages)
    - Notice of consultation about the proposed remedies: third parties have until October 6th to provide feedback
    - MS requests consent to the CMA to close (this is regarding the final order of the original deal, something that has to be addressed before closing): third parties have until October 6th to provide feedback

    There is also a final dig to MS from the CMA in the press release :p xD

    Sarah Cardell, CEO of the CMA, said:

    "The CMA's position has been consistent throughout – this merger could only go ahead if competition, innovation, and choice in cloud gaming was preserved. In response to our original prohibition, Microsoft has now substantially restructured the deal, taking the necessary steps to address our original concerns.

    "It would have been far better, though, if Microsoft had put forward this restructure during our original investigation. This case illustrates the costs, uncertainty and delay that parties can incur if a credible and effective remedy option exists but is not put on the table at the right time."
     
    • The CMA approves the acquisition
    • OP
    OP
    Idas

    Idas

    Antitrusting By Keyboard
    Member
    Mar 20, 2022
    2,090
    There you go, the CMA approves the acquisition!

    The CMA grants consent for Microsoft to acquire ABK (this was required due to the original deal being blocked):
    The CMA accepts the remedies/undertakings offered by MS:
    www.gov.uk

    Microsoft concession a gamechanger that will promote competition

    The new deal for Microsoft to buy Activision without cloud gaming rights has been cleared after the CMA concluded it would preserve competitive prices and better services.
    www.gov.uk www.gov.uk
    Click to expand...
    Click to shrink...

    A bit of drama from the CMA on the press release :P

    Sarah Cardell, Chief Executive of the CMA said:

    The CMA is resolute in its determination to prevent mergers that harm competition and deliver bad outcomes for consumers and businesses. We take our decisions free from political influence and we won't be swayed by corporate lobbying.

    We delivered a clear message to Microsoft that the deal would be blocked unless they comprehensively addressed our concerns and stuck to our guns on that.

    With the sale of Activision's cloud streaming rights to Ubisoft, we've made sure Microsoft can't have a stranglehold over this important and rapidly developing market. As cloud gaming grows, this intervention will ensure people get more competitive prices, better services and more choice. We are the only competition agency globally to have delivered this outcome.

    But businesses and their advisors should be in no doubt that the tactics employed by Microsoft are no way to engage with the CMA    . Microsoft had the chance to restructure during our initial investigation but instead continued to insist on a package of measures that we told them simply wouldn't work. Dragging out proceedings in this way only wastes time and money.

    Martin Coleman, Chair of the Independent Panel who reviewed the original Microsoft deal, said:

    Cloud gaming is an important new way for gamers to access games and this deal could have seriously undermined its potential development. On that we, the European Commission and the US Federal Trade Commission are in full agreement. Where we differ is on how we solve that problem. We rejected a solution put to us by the parties which would have left Microsoft with too much control.

    We now have a new transaction in which the cloud distribution of Activision games, old and new, is taken away from Microsoft and put into the hands of Ubisoft, an independent party who is committed to widening access to the games. That's better for competition, better for consumers and better for economic growth.
    Click to expand...
    Click to shrink...
     
    Last edited:
    • Australia (ACCC) discontinues its review of the acquisition
    • OP
    OP
    Idas

    Idas

    Antitrusting By Keyboard
    Member
    Mar 20, 2022
    2,090
    Australia (ACCC) is done with the acquisition (was the most likely scenario):

    16 Oct 2023After considering the status and outcomes of other international regulators' reviews and changes to the transaction structure, including related agreements with third parties, the ACCC discontinued its review of the acquisition and does not intend to take any further action.

    Another chapter to close.
     
    • Post merger: possible topics for the next 6 months
    • OP
    OP
    Idas

    Idas

    Antitrusting By Keyboard
    Member
    Mar 20, 2022
    2,090
    GamerEDM said:
    im thinking of muting/ignoring this thread is there gonna be any really significant announcements that i cant get from the other threads?
    Click to expand...
    Click to shrink...

    These should be the main topics for the next 6 months:

    - The FTC appeal in front of the Ninth Circuit: oral arguments are expected to start on December 6th 2023.

    - The FTC resuming the administrative process in January/February 2024.

    - The gamer's lawsuit: February 5th 2024 is the placeholder trial date for it.

    - The implementation of the different remedies: the EC commitments and the CMA undertakings, including the original cloud agreements (Ubitus, Nivida, Boosteroid and Nware) + the Ubisoft Agreement.

    - The annual reports about the implementation of the corresponding remedies: we should get the first one on March 31st 2024 through the CMA.

    - The execution of the Nintendo, Sony and CWA (in 60 days since the merger closing) agreements.

    - Any potential conflicts or issues that could arise due to all of the above.

    - We are also missing some reports (from New Zealand and Turkey, for example).


    So, in theory nothing critical but depending on the FTC and some other parties involved there could still be interesting developments.
     
    • Documents shared/leaked during the FTC PI: the original process
    • OP
    OP
    Idas

    Idas

    Antitrusting By Keyboard
    Member
    Mar 20, 2022
    2,090
    I'll start adding every week the documents leaked or shared during the FTC PI and the 9th Circuit appeal and highlights from them.

    I'll create threadmarks and I'll add them to the OT too.

    This way everything can be archived here and should be easier to search for in the future.

    Documents from the original process: June 22nd - June 29th 2023

    1.- From the docket entries, the EXHIBIT LISTS from the FTC by checking the name of the document or subject of the email; regarding acquisitions:

    - The acquisition of Double Fine | Project alias unknown: requested on April 4th 2019; announced on June 9th 2019.

    - The acquisition of Square Enix | Project Phoenix: preliminary discussion on October 31st 2019; requested on January 9th 2020.

    - The acquisition of Warner Bros Interactive | Project alias unknown: actively explored since at least July 2020.

    - The acquisition of Zenimax Media | Project Atom: requested in mid/late July 2020; announced on September 21st 2020, completed on March 9th 2021.

    - The acquisition of SEGA | Project alias unknown: requested on November 10th, 2020.

    - Unknown "potential acquisition" (those are the terms used on the subject of the email) discussed on March 22nd 2021.

    - Unknown "potential acquisition" (those are the terms used on the subject of the email) discussed on April 21st 2021.

    - Project Neutrino: discussed on April 28th 2021; again on February 15th 2022 | Likely related to cloud gaming, not an acquisition.

    - Unknown "potential acquisition" (those are the terms used on the subject of the email) discussed on June 17th 2021.

    - Unknown "potential acquisition" (those are the terms used on the subject of the email) discussed on June 18th 2021.

    - The acquisition of Electronic Arts? 🤔 | Project alias unknown: a mail from Phil Spencer to Satya Nadella (CEO) and Amy Hood (CFO) called "EA move" on June 23rd 2021.

    - The acquisition of Zynga | Project Zipline: discussed since at least August 17th 2021 with this name; likely requested on October 2021.

    - Unknown "potential acquisition" (those are the terms used on the subject of the email) discussed on October 5th 2021.

    - Unknown "potential acquisition" (those are the terms used on the subject of the email) discussed on November 12th 2021.

    - The acquisition of Activision Blizzard King | Project Denali: requested on mid November 2021; announced on January 18th 2022; completed on October 13th 2023.

    - Unknown "potential acquisition" (those are the terms used on the subject of the email) discussed on January 14th 2022.

    - Project Singularity: discussed on June 17th 2022 | Likely related to cloud gaming, not an acquisition.

    2.- Exhibit PX1065 | Request for the acquisition of SEGA in November 10th 2020.

    The documents attached to exhibit PX7011 by mistake (the Phil Spencer hearing) included a non-redacted version of the document.

    A) The document about the possible acquisition of SEGA (November 2020), clearly states the "Prioritising Acquisition Targets":

    To help inform our next strategic acquisition target, we have identified top priority segment and geographic combinations for Xbox, in order:
    • PC in North America and Europe
    • Mobile in North America and Europe
    • Console and PC in APAC (Asia - Pacific)
    Keeping in mind these leading priorities, we evaluated a set of targets, both individually and in combination of our own studios, to determine the best strategic fit. Sega is the most attractive next acquisition target due to its global PC catalog, presence on mobile in Asia, and global brand affinity on console through its classic IP.

    After closing the ABK acquisition, I guess that PC in North America and Europe (CoD + Blizzard) and Mobile in North America and Europe (King, CoD Mobile and mobile games from Blizzard) would be pretty much done.

    Therefore, it looks like the next acquisition target should be for:
    • Console and PC in APAC (Asia - Pacific)
    In fact, it sounds like the potential acquisitions of Square Enix (November 2019) and then SEGA (November 2020) were trying to cover the three priorities at the same time.

    I guess that the acquisition of Zenimax (September 2020) could have been enough to cover the PC in North America and Europe priority, and that's why the focus went to Mobile in North America and Europe with ABK. However, the possible acquisition of SEGA was discussed in November 2020, two months after the Zenimax acquisition had been announced, and PC in North America and Europe still was a priority. So, who knows if the acquisition of ABK would be enough to cover that priority.

    B) The document about the potential acquisition of SEGA clearly states how they would operate:

    Subject to diligence and discussions with Sega's leadership team, we expect Sega to report to Matt Booty with the following operating principles:

    - We will continue to develop and sell all acquired games and franchises on all relevant platforms (e.g., Android, iOS, PlayStation, Steam, Switch, Windows, Xbox, etc.)

    - We will bring previously exclusive to PlayStation and Nintendo titles to Xbox and launch future titles on Xbox in addition to other relevant platforms as rights permit.

    - We will launch all acquired games and franchises with subscription exclusivity into Xbox Game Pass on console, PC, and cloud; future releases will ship into Xbox Game Pass on a day-and- date basis.

    C) Regarding the third top priority segment and geographic combination:
    • Console and PC in APAC (Asia - Pacific)
    In the documents about the possible acquisition of SEGA, MS clearly states the key risks:

    While Sega represents a meaningful opportunity for Gaming, we are cognizant of the following strategic and operating risks:

    - Deal execution: It is unclear whether Sega Sammy has appetite to divest their gaming studios, which have represented roughly half of their revenue and operating income. Deal execution would likely be particularly complex.

    - Integration risk: Microsoft has limited experience with Japanese acquisitions. Our preliminary integration plan is intended to preserve a degree of cultural & operating autonomy for Sega by having its Consumer division leadership report to Matt Booty. However, there is a risk that this plan may not completely account for cultural and/or other integration challenges.

    It sounds like MS was really interested in a Japanese, Korean or even Chinese publisher (while talking about comparable tradings to SEGA, companies like Netmarble, IGG or GungHo are mentioned) but they knew that there is a cultural risk if the acquisition happens and that the limited experiences of MS acquiring companies in Asia could be problematic.

    In addition to that, MS states that the company has assets that would be of no value for them (pachinko, resorts, etc).
     
    • The merger could be invalid according to Delaware law New
    • OP
    OP
    Idas

    Idas

    Antitrusting By Keyboard
    Member
    Mar 20, 2022
    2,090
    A few updates from March and early April:

    - In Ap-Fonden v. Activision, the Delaware Court of Chancery held that common practices the board of Activision Blizzard followed in approving its October 2023 merger with Microsoft may not have complied with technical requirements in the Delaware General Corporation Law relating to mergers, and therefore the merger may have been invalid. On that basis, the court, at the pleading stage of litigation, let survive the plaintiff's claim for unlawful conversion of his shares in the merger (i.e., an unlawful taking—essentially, a tort of theft).

    The issue was that the board approved a draft merger agreement with a lot of important stuff missing:
    • The name of the target
    • The merger consideration
    • The disclosure letter
    • The disclosure schedules
    • The charter of the surviving company
    • The dividend provision (this was considered a key issue)
    In the end it shouldn't affect the merger (it can be appealed and worst case scenario is likely a settlement with the plaintiff) but it's another twist to the story.

    - Awards session for mergers :p "Microsoft/Activision Blizzard cleans up at GCR Awards".

    globalcompetitionreview.com

    Microsoft/Activision Blizzard cleans up at GCR Awards

    Microsoft’s $69 billion acquisition of Activision Blizzard scooped Matter of the Year at GCR’s annual awards ceremony last night, together with the prizes for Merger Control Matter of the Year for Europe and the Americas.
    globalcompetitionreview.com globalcompetitionreview.com
    Click to expand...
    Click to shrink...

    - Update from the Commerce Commission New Zealand case register: I think that they added the cross-submission documents. But still no text from the final decision.

    - The first Compliance Report about the merger and its remedies should have been delivered to the CMA by 31st March.
     
  • New
    • You must log in or register to reply here.