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This article was published on May 25, 2023

Microsoft’s appeal over UK’s Activision veto is ‘chance to find a third way,’ say legal experts

The UK regulator is getting lonely

Microsoft’s appeal over UK’s Activision veto is ‘chance to find a third way,’ say legal experts

Microsoft’s appeal against a veto of its Activision Blizzard takeover offers a chance to “find a third way” in the feud, say legal experts.

The Xbox maker on Wednesday formally appealed a UK regulator’s decision to block the $69bn (€64bn) deal. The shock intervention was a potentially fatal blow to the bid for Activision, which owns the Call of Duty, Candy Crush, and Warcraft franchises.

The Competition and Markets Authority (CMA) had concluded that the purchase would give Microsoft an unfair edge in the nascent cloud gaming market.

The decision made the CMA an international outlier among antitrust regulators — and anathema to Microsoft. The tech giant’s president, Brad Smith, said the move was “bad for Britain” and Microsoft’s “darkest day” in its four decades of working in the country. He promised to appeal the ruling.

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That promise has now been fulfilled. A Microsoft spokesperson has confirmed that a formal appeal was lodged on Wednesday — the deadline for filing one.

Gareth Mills, a partner at law firm Charles Russell Speechlys, said Microsoft’s rhetoric shows the company is taking “an extremely robust approach” to the appeal. He added that the company is willing to use its “considerable resources to test the CMA’s resolve.”

That resolve is already under significant strain. In addition to enduring heavy pressure from Microsoft, Activision, and countless gamers who support the deal, the CMA has become increasingly isolated.

In the last fortnight, both China and the EU have approved the deal. According to Microsoft, the takeover has now been cleared by 37 countries, which collectively represent more than two billion people.”

In the appeal against the CMA veto, the EU’s decision could be particularly influential.

“The EU’s approval of the Activision acquisition (albeit with conditions attached) may give both parties an opportunity to find a third way,” says Mills, “although such would represent a considerable change in tone and attitude from those currently being expressed.”

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