Beep boop - this is a robot. A new show has been posted to TWiT…
What are your thoughts about today’s show? We’d love to hear from you!
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IMO, I actually think the CMA’s ruling was pretty reasonable and easy to parse. Some quick reflections on the clip.
Let’s actually read the CMA’s total 400+ page report (quite easy to read, IMHO) before we start up the old op-ed columns.
It is very extensive and debunks most of the theories found in the episode. The devil is the details and Microsoft looks like the devil-ish one, once you analyze MS’ “remedies” to CMA in the past 60 days.
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The CMA never said “yes” to the deal. I think some headline skimming was going on.
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In February 2023, CMA said console gaming & cloud gaming were two major markets at risk.
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In March 2023, CMA said the scope was narrowed to exclusively cloud gaming.
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Nothing left-field, nothing surprising, nothing shocking. MS was working day-and-night on cloud gaming remedies, yet all full of major loopholes, for 2+ months. CMA announced it months ago.
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Paul agrees two markets exist by noting that console vs streaming really don’t overlap.
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Call of Duty is a major part of the CMA’s cloud gaming ruling. MS paid $69 billion, wrote lots of loopholes (e.g., excluded some streaming providers altogether), and Microsoft’s significant 70% market share in cloud streaming + enormous structural advantages (e.g., Azure) meant MS is both allowed & incentivized for AAA Activision titles to be an xCloud exclusive at some point OR heavily degrade the experience on other streaming platforms in 100,000 ways. Microsoft wrote these generous “get out of jail free cards” into their proposed cloud remedies.
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All antitrust—heck all economics—must deal with hypotheticals, future estimates, and “skating to where the puck will be”. It’d be useless otherwise. Really surprised to hear this invalid point brought up a few times. See here and here. All economic analysis concerns future behavior. That’s just a fact.
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That goes to Richard’s point that “CMA is just avoiding future regulation”, i.e., the CMA is lazy. It is quite complex, for companies included, to undo antitrust mergers. It’ll been such a waste of everyone’s time, energy, money to keep stringing this along. The burden was on Microsoft to offer remedies to meet the law, with its mountains of lawyers and a year of time. If MS & Activision couldn’t get it right still, why drag it out? By February 2023, CMA told Microsoft it had major concerns on SLC & cloud gaming. MS cloud remedies were, IMO, quite weak and cheap.
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The console market has been dominated by three players: the network effect here generates weak competition. Game streaming offers a potentially much more competitive market and all estimates show extensive, rapid growth in the next three years. By removing the heavy hardware requirements of consoles, game streaming is due to be much more competitive.
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That “PS” controller in CMA’s tweet: nah, a PS controller has two large joysticks.
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Tiny, “unimportant” markets can explode in growth. See online shopping, online video streaming, online search engines, online music streaming, etc. Not a coincidence most are online.
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The CMA is not “just using Sony’s points”. That’s headline skimming again vs the CMA’s report. There are many published third-party analyses the CMA took into account. CTRL+F Market Participant here.
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It’s not enough to just promise to put CoD on Sony’s cloud gaming. That reinforces the same oligopoly of three that dominate console gaming, again. And “putting” can have 10,000 restrictions (see below). This is much, much more about smaller streaming companies than Sony.
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Microsoft’s concessions were full of loopholes. Microsoft purposefully wrote very restrictive remedies. See below (again). Nobody, especially not Microsoft, was blindsided. There were months of negotiations on cloud gaming between the CMA & Microsoft for over 60+ days before the ruling. Microsoft didn’t meet the bar; it’s as simple as that.
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Precisely one headline explains why Boosteroid is sad this merger didn’t go through.
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Microsoft absolutely, 100% knew that their cloud gaming remedy was the only way to get this deal. They’d been trying, and failing, to convince the CMA for the past two months. Nobody at Microsoft was blindsided that the ruling hinged on cloud gaming.
Do read the report from pages 340+ onwards.
Examples of massive loopholes that Microsoft left in:
This comment by Alexr on Ars Technica gives a simpler explanation of why up-and-coming markets must be regulated and future competition must be protected:
One of the reasons given by the CMA for its examination of cloud gaming on non-Windows devices is that the gaming market has been dominated by Microsoft, Sony, and Nintendo for 20 years, with few new entrants in that time. Consoles have a strong network effect, since you have to buy licensed games for them, and social features are locked to that console.
The CMA expects that within the next five years, cloud gaming has the potential to significantly disrupt the console market for the first time this century, because low-power devices like smart TVs and streaming boxes will be able to offer an experience comparable to current-gen consoles. Microsoft already has an enormous advantage and market share lead in cloud gaming (especially since it owns Azure), and the CMA found that there’s a >50% chance of a significant lessening of competition in cloud gaming if Activision were acquired, giving Microsoft’s cloud gaming platform inherent advantages when it comes to Activision’s very popular franchises. They found it likely that Microsoft, having consolidated its leading position in cloud gaming, would then be free to raise prices. Microsoft offered terms under which they’d guarantee to let other cloud gaming platforms use Activision’s content, but the CMA found that they’d only cover a small number of possible cloud gaming service business models, and would be difficult to enforce in a rapidly growing market.
Sony isn’t germane to the CMA’s decision. Microsoft’s hold on the cloud gaming market may seem good to customers now, who are enjoying a large library at a low price, but in a future where everyone is playing games through smart TVs using Xbox Cloud Gaming rather than through consoles, Microsoft will be in a position to raise prices or extract extremely favourable terms from partners.
EDIT:
My final notes here:
- Paul, etc. should all be congratulated for getting the console competitiveness bit right. The CMA agrees with Microsoft and Paul and many others that concluded this deal wouldn’t significantly lessen console competitiveness.
- Hey, Microsoft has $69 billion extra now. That would go a long way to make an excellent in-house game streaming service even better.
As some prescient commenters on The Verge wrote,
strangevil: Look at this way Microsoft, you now have $69 Billion to actually make consistently good video games using your dozens of existing studios and talent, which is something you haven’t done in a while.
CSCAdmin: Look at this way Microsoft, you now have $69 Billion to actually make consistently good video games using your dozens of existing studios and talent, which is something you haven’t done in a while.
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And as expected, MS are responding with this via the press…
‘“There’s a clear message here - the European Union is a more attractive place to start a business than the United Kingdom.”’
Furious Microsoft boss says confidence in UK ‘severely shaken’ - BBC News
That “PS” controller in CMA’s tweet: nah
That bit was really a stretch, I agree
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I am ashamed to be British, typical Civil Servant idiots who have nothing better to do, other than stick it to big tech. I would hope the EU and the US say yes and when MS appeal in the UK the judges ask what the hell were you thinking there is nothing to block here, nobody to affect. I refrain from swearing in forums, but good grief this ia stupid ruling.
To comment on the growing number of Teams users: I have noticed several organizations I receive meeting invites from moving from Zoom to teams. I am curious if this is spelling a large decline in Zoom usage in the endemic stages of Covid?
I’m assuming this is because teams has a better pricing structure, especially if it’s included in O365
Listening to the show, I thought the same thing, but actually reading some of the report and what @ikjadoon wrote, they do actually make some good points and it looks like the Microsoft remedies to those questions were weasily to put it politely…
I think this might be a case of 6 of one half a dozen of the other. The UK made some good points about the future of streaming and Microsoft came up with answers with enough weasel room to make them pretty much redundant.
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I can’t help but think it is political bias, the chairman is a long time hardcore Labour guy., and big business is obviously the antichrist to him. It will be interesting to see if game streaming becomes a big thing in the next 5 or even 10 years - if ever.
A big reason is down to pandemic based ‘soft advertising’.
Everytime the BBC had someone video in it was by default called a Zoom call. Every time they mentioned people remote working and connecting with each other they were ‘Zooming’
Very few people even the tech oriented ever used the name teams and the name became ubiquitous like Hoover or Google.
We all know no that Miele make the best vacuum cleaners, but in our it’s still called the hoover 
I overheard someone the other day talking about using the new Bing thing to Google something!
People have probably seen the cool stuff their kids were able to during lock down as part of remote learning and want that for their businesses.
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On the Surface note, watch out for the Samsung built, Microsoft designed, Copilot Communicator.
Android based and featuring a neural processor it runs an AI powered skin over the base android and is the world’s first Very Smartphone
It’s an interesting point raised in the show. Should you take Paul’s approach, i.e. wait until monopolistic behaviour has occurred (and by definition, the market has been harmed) before legislating, or should you be more proactive as I think the CMA is attempting to do and try and protect future markets? But if you’re too heavy-handed, the market doesn’t develop.
I haven’t got my head around the global aspect of this. Say that UK and EU say no, US and others say OK for the purchase to go ahead. Both are US companies.
Does MS get sanctioned? Banned in UK/EU? Or legally the purchase can’t happen?
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There is a great quote from the Mote in God’s Eye about going with a deal as it stands, you can always adjust it later. The Senator replies to his niece, “like hell, Pussycat! Once the big boys have invested…” I can’t remember it exactly and don’t have the book to hand, but essentially, once people have invested in the deal as it stands, it is very difficult to make any adjustments or changes or roll it back, so it is more important to get it right going in, as it will save a lot of time and energy in the long run.
I think a large part is the UK wanting to seem like it is still relevant, we are not, we don’t have a dog in this fight.
It’s crazy over something that probably will never happen - if you really want to make a difference go after Google for their search monopoly and Apple fir grabbing 30% of anything that comes near them.
There’s definitely an element of that. Previously this decision would have been part of the wider EU consensus.
Aren’t UK gamers the dogs in this hunt?
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I think adjudicating before there is harm is a risky business akin to “pre-crime” and prior restraint. For the most part US jurisprudence eschews such things. And who’s to say any government body is smart enough to pre-empt harm instead of causing it.
My fird boss used to say ‘those who can do, those who can’t teach, those who can’t teach become politicians’!
I tend to disagree with that sentiment. I know some incredible teachers who have worked in their field and have a gift for passing along their knowledge and wisdom to students.
With respect to politicians - I think that’s a popular myth. But even if there’s some truth in there - if we want better politicians, we need to elect them. But that’s a whole 'nuther topic.
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I think it very much depends on the country and the type of school, I have mixed feelings about it overall. I have met very few excellent ones, but try to stay in touch with those I have, the curriculum, particularly in the technical subjects let’s many down
I hate MS Teams. It’s sort of a chaotic mess. It does way too many things in poorly integrated ways. The college I goto uses it. I’ve had problems with scheduled meetings not appearing in my (Teams) calendar even though I got an email remember (which I only found after because the schools spam filter was like oh this is from an external domain it’s spam). The UI is just generally bloated and confusing.
I have spent 3 years teaching it to teachers and students, the biggest problem is it can do too much. It really is as Paul Thurrot says, a platform, most issues of the type you describe are down to the other type of AI (Admin Interference).
I currently have no issues with it other than there always seems to be at least a dozen ways to complete any task
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