Monday, October 24, 2022

Brazil's clearance of Microsoft-ActivisionBlizzard becomes final as deadline for Administrative Tribunal review has lapsed--meanwhile, 'console wars' extend to British merger review process

On October 6, Brazil's antitrust authority--Conselho Administrativo de Defesa Econômica (CADE), which translates as Administrative Council for Economic Defense--granted unconditional clearance to Microsoft's acquisition of Activision Blizzard King. In the post I just linked to, I summarized the key findings. Microsoft published their English-language highlights of the ruling.

The Administrative Tribunal of CADE could have determined to review the decision of the General Superintendence (Superintendência Geral, SG). The deadline for that was 15 days after the decision, i.e., on Friday. As no such review had been initiated during the statutory period, CADE today announced that the decision has become final.

Merger reviews are underway in multiple jurisdictions. For instance, the European Commission (case no. M.10646) will announce its Phase 1 decision on November 8. That day is going to be (at least) doubly eventful from a FOSS Patents perspective as the Mannheim Regional Court will hold the first Ericsson v. Apple trial in the current multi-jurisdictional dispute.

At this stage, the jurisdiction that has received more attention than any other--oddly, even more than the Federal Trade Commission (FTC) of the United States--for its review of Microsoft-ActivisionBlizzard is the Competition & Markets Authority (CMA) of the United Kingdom. I've previously declared myself in disagreement with some of its theories, though I remain a big fan of the CMA's work on mobile platform issues.

The urgent need for competition in mobile app distribution is the primary reason--other than my own Blizzard history, which I've mentioned on a few occasions--why I hope the deal will go through is that Microsoft plans to compete with Apple's App Store and with the Google Play Store, and the popularity of certain mobile games by Activision Blizzard King plays a key role (simply put, Microsoft needs those titles to overcome the Power of Default, a competition-limiting force that antitrust authorities like the Competition Commission of India and the EU General Court in its Google Android decision have already recognized as a major impediment to competition in the mobile space).

By contrast, Google would rather pay hundreds of millions of dollars to companies like Activision Blizzard King to dissuade them from challenging Google's Android app distribution monopoly.

Microsoft's entry into the mobile app distribution market is already viewed favorably by key players of whom it was by no means a given that they would take this position. First, Epic Games' CEO Tim Sweeney tweeted that he'd gladly compete with Apple's App Store as well as with a Microsoft app store on iOS, and then John Gruber ("the King of the Apple Geeks" and aligned with Apple approximately 95% of the time) surprisingly said "Microsoft would be great":

I defended Epic against this accusation. One may or may not agree with what they did, but they harmed no user. If anything, some users saved money because they bought Fortnite's in-game currency (V-Bucks) at a reduced price.

So there is a lot of debate about platform governance, and some observers have already predicted that the "console wars"--the emotional discourse between Sony PlayStation and Microsoft Xbox fans--would now extend to the merger review as the CMA will accept input from literally anyone until October 28 (Friday). This tweet by GeneralMLD, an Xbox-focused YouTuber, is an example as he jokingly expresses his confidence that his submission to the CMA (which he shared on Twitter) "is more structured and articulate th[a]n the fear[]mongering emails from [PlayStation] fanboys":

Asking PlayStation and Xbox fans for their opinions on Microsoft's purchase of Activision Blizzard King is like if you had asked Manchester City and Manchester United fans about Erling Haaland's transfer to the former.

As the debate continues, more and more jurisdictions will approve the transaction. Prior to Brazil, Saudi Arabia and a third unknown jurisdiction (possibly the United Arab Emirates) had already granted clearance.