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[Topher]

So, guys, solve this question for me. Is this "But Microsoft can rent a building in the UK to establish an Activision UK to get the deal through" logic, that some posters on the GamingLeaksAndRumours subreddit, possible? Or are they inhaling the hopium hard and making stuff as they go due to the stuff MLex has posted? Can Microsoft actually do this? Or does the 10 year block that the CMA put in place (that prohibits investment and purchase of stocks) make this impossible? I'm confused because the posters on that subreddit have made that narrative above thanks to the remarks made by MLex.

MLex said the MS-ABK lawyers are trying to figure out a way to get around the CMA order. The folks on reddit will have to explain how renting a building in the UK somehow makes MS-ABK immune to UK laws. Both companies are incorporated in the UK.

Going to be a tough case, they are going to have to come up with some good argument/reciepts. I don't think it's going to go anywhere.


They all have the ability to make decisions to make orders that have international impact whilst having that duty to take other regulators as part of consideration. CAT did tell the CMA previously that they needed to think about it.

Personally I am going to play ToTK but nice talking about the concept of comity.

Seems like CMA thought about it. That's a pretty vague ruling from the CAT though.

 

[feynoob]

Who the fuck is even MLex?

 

[jm89]

The folks on reddit will have to explain how renting a building in the UK somehow makes MS-ABK immune to UK laws. Both companies are incorporated in the UK.

Shut the curtains, CMA won't be able to see inside.

Boom, regulation avoided.

 

[Topher]

Who the fuck is even MLex?

Regulatory News & Reports

Market insight & analysis on regulatory risk for law firms, corporations, hedge funds

mlexmarketinsight.com

 

[Topher]

Shut the curtains, CMA won't be able to see inside.

Boom, regulation avoided.

Microsoft Authorized Reseller....

 

[Three]

Enterprise Act 86(1)

Enterprise Act 2002

An Act to establish and provide for the functions of the Office of Fair Trading, the Competition Appeal Tribunal and the Competition Service; to make provision about mergers and market structures and conduct; to amend the constitution and functions of the Competition Commission; to create an...

www.legislation.gov.uk

CMA's order of prohibition legally extends outside of the UK.

The same Enterprise Act prohibits information sharing between regulators under section 239. MS didn’t sign a requested waiver of confidentiality and were trying hard to find instances where the CMA and FTC may have communicated without their consent because they didn’t want them to agree with the earlier FTC decision to block. MS signed a waiver with the EC only late in the game when they knew they had a good chance they would accept their remedies. They felt they could help persuade others and later claim they didn't work together to come to the same conclusion.

That's why the talking point and script has become about "X number of countries vs... ". They are trying to pressure the UK and US into this 'comity' trap.

 

[Dick Jones]

I really don't get this take. The UK and CMA don't rule the world? Do people really want one country's laws to be enforced in every nation on earth?

This wouldn't be blowing off a countries laws.

It would be saying "ok you don't want this in the UK. We will abide by that and set it up so it follows your laws" There's nothing illegal or bad about that. Google does it in China and I'm sure there's lots of other examples.

I imagine the reason why the FTC, EC and CMA agreement is required in the contract as MS don't want to be tied to following through with buying ABK at the cost of losing access to the US, EU and UK markets. MS and ABK made the CMA a kingmaker in January 2022. As a result without the agreement of all named regulators the dead is dead. Now the only way around it is that MS and ABK make a new agreement to get around it with shareholders agreement. Now the CMA had imposed a 10 year ban on agreements between the parties without the CMA agreement and even if MS are dumb enough to break that, they pay over 20bn a year in fines.

You're idea sounds very Pachteresque (don't ever take that as a compliment) and has been shot down multiple times in the thread.

 

[feynoob]

Microsoft Authorized Reseller....

Here is all things you need to hide from the CMA.

 

[Ronin_7]

Who the fuck is even MLex?

No idea, probably just another BS guy

 

[Dick Jones]

Who the fuck is even MLex?

Michael Rosenbaum. It's his nickname because he played Lex Luthor in Smallville and people love his legal takes.

 

[X-Wing]

I imagine the reason why the FTC, EC and CMA agreement is required in the contract as MS don't want to be tied to following through with buying ABK at the cost of losing access to the US, EU and UK markets. MS and ABK made the CMA a kingmaker in January 2022. As a result without the agreement of all named regulators the dead is dead. Now the only way around it is that MS and ABK make a new agreement to get around it with shareholders agreement. Now the CMA had imposed a 10 year ban on agreements between the parties without the CMA agreement and even if MS are dumb enough to break that, they pay over 20bn a year in fines.

You're idea sounds very Pachteresque (don't ever take that as a compliment) and has been shot down multiple times in the thread.

But, isn't approval by the regulators necessary for the SEC to allow the deal to go through?

 

[gothmog]

But UK's local restrictions do have power over them as a global company.

Only if they choose to be there. They are free to not be there. Global doesn't mean a right to access everyone and everywhere with no rules.

 

[Dick Jones]

But, isn't approval by the regulators necessary for the SEC to allow the deal to go through?

Approval by regulators is necessary per the MS/ABK deal that shareholders agreed on. It doesn't matter outside that. That's enough to kill the deal.

 

[MasterCornholio]

After reading the MLEX article I still believe the most realistic way of getting this done is winning the appeal. Then submitting it back to the CMA where they will ask Microsoft for concessions that they are fine with.

But of course there's plenty of obstacles to get to that situation.

 

[DeepEnigma]

It is crazy that some people are applauding the idea that a company as large as MS is planning to blow off a nation's regulatory agency. A regulatory agency that was specifically required as part of the agreement that MS signed. All in the name of fanboyism? Game Pass? Winning? I am becoming less of a MS/Xbox fan with each tantrum they throw.

I do wonder what the punishment would look like. It would have to be harsh enough that nobody else ever dared try it again. Even if MS somehow pulled off the Hail Mary and maneuvers out of the UK to get around it, I would have to think it would severely impact any future business with MS in the UK. Aren't they already facing an investigation in the UK for Cloud services? I am a little surprised MS is willing to die on this hill all while it is Activision actually holds the power to kill this deal. Then what? Team green turns on Activision?

It's because extreme fanboyism is a mental illness.

 

[Topher]

But, isn't approval by the regulators necessary for the SEC to allow the deal to go through?

That's something I'm not clear about. That is an agreement between Microsoft and ABK. I'm not sure this agreement was filed with the SEC for the purposes of the SEC being the gatekeeper to closing the deal. I think MS and ABK can amend that agreement if they need to, but again, I'm not sure.

 

[DeepEnigma]

Apparently, the contract between Activision and MS states that the CMA must approve the merger in order for it to move forward.

The CMA have rejected the merger, therefore it can't move forward.

If MS and Activison wish to move forward without the CMA, they will need to draw up a new contract, which presumably would need to be put to the vote before shareholders, who may well reject it if the CMA isn't involved.

That's as far as I understand it.

The CMA will still regulate whether they're included in the contract (which was a confidence bargaining chip for the shareholders) or not.

You can't just go around buying up companies in a global market of this scale without oversight and regulation bodies reviewing it.

 

[Pelta88]

Sounds like a leadership statement.

I'm taking bets!

 

[X-Wing]

Now, serious question. Do you guys think that this acquisition has broaden even more the divide in the gaming community? Are we even more tribalistic now because of this?
Was trying to buy the biggest third party publisher the last drop on the gaming community?

 

[Dick Jones]

Sounds like a leadership statement.

I'm taking bets!

She will take over after Starfield officially.
She will take the lead on the E3 show. The only way I see Phil on it if it's a retirement announcement

 

[Elios83]

Sounds like a leadership statement.

I'm taking bets!

Yeah the way she's making more and more of these leader-like tweets while Spencer is silent except for the latest interview where he basically admitted defeat, make me think that internally Spencer is already on his way out.
His plan of pushing Series S hardware, Gamepass and acquisitions hasn't yielded the expected results and both him and the company probably think he has exhausted all his options and they need a new leadership.

 

[Sneakysnake]

Is this where I post the screenshots of all the gaffers calling me names for suggesting that MS may just carve out the UK?

 

[Mr Moose]

Is this where I post the screenshots of all the gaffers calling me names for suggesting that MS may just carve out the UK?

Go for it.

 

[ReBurn]

There isn't a way for Microsoft to abide by UK laws and also close on the ABK deal (as things currently stand). Like it or not, this is part of the challenge companies face when becoming a multinational corporation.

What proof is there that it's absolutely impossible for this deal to close in a way that won't violate UK law?

If the specific objection is cloud and CMA won't accept remedies related to cloud, you can be sure that one of the things Microsoft is looking at is options that could exclude their cloud gaming offerings from the UK cloud gaming market. That would allow all of these other growing cloud gaming companies the CMA is worried about to compete free of Microsoft's influence there. The downside would be that UK consumers miss out on Microsoft's cloud offerings, but going by the prevailing sentiment on this forum nobody cares about cloud gaming, anyway. If the revenue potential of the acquisition exceeds lost revenue from a modified GPU offering in the UK then it's probably on a whiteboard somewhere as a potential path to resolution.

Next someone is going to say that it's not possible for Microsoft to segment the business that way and that they would have to completely stop doing business in the UK, removing Windows, Office and Azure along with Xbox. Or that the Xbox business would have to completely leave the UK. I've been following along and I don't see where either of those assertions have been proven true. The CMA decision to block is based specifically on concerns about the cloud market, not the total gaming market, and the CMA has already declared that the whole COD thing is fine and wouldn't harm competition in the UK. If Microsoft divest or eliminate the portion of their business in the UK that conflicts with UK regulation then the letter of the law is likely satisfied, even though the spirit of the law has been trampled to death. The CMA most likely can't tell Microsoft that they must deliver cloud gaming offerings to the UK to be able to do business there.

 

[feynoob]

Now, serious question. Do you guys think that this acquisition has broaden even more the divide in the gaming community? Are we even more tribalistic now because of this?
Was trying to buy the biggest third party publisher the last drop on the gaming community?

Twitter and other social media gamers have been like for a long time.
You only see the loud ones on this deal.

 

[feynoob]

Is this where I post the screenshots of all the gaffers calling me names for suggesting that MS may just carve out the UK?

Remember, if they do this, I will ask mods to give me "Daddy Phil " tag on my profile.

 

[harry mason 1989]

Is this where I post the screenshots of all the gaffers calling me names for suggesting that MS may just carve out the UK?

Do it

 

[demigod]

I have trouble believing Microsoft could be that retarded. As incompetent as they've shown themselves to be, I don't see how Activision stomachs the loss in sales. We're talking billions year in year out. That said, it'd be hilarious for Microsoft to demonstrate just how meaningless all their PR is. It would be a showcase of how hollow their "Better For Gamers" & "More choice" PR actually was.

Forget shooting themselves in the foot. This move would be a bazooka to the chest level of catastrophic. Which is why I find it difficult to believe.

Report from who? Xbox fanboys wetdream report?

 

[feynoob]

These fanboys Twitter should be banned as a source.
They know nothing about the deal.

 

[MistBreeze]

Microsoft executives and media shells shouting every day about this deal like it is the end of the world for them ?!!
Strange as if it is life or death for xbox
Adding phill’s surrendering statements admitting defeat and all
It is a mess of a situation reslly

 

[dotnotbot]

I have trouble believing Microsoft could be that retarded. As incompetent as they've shown themselves to be, I don't see how Activision stomachs the loss in sales. We're talking billions year in year out. That said, it'd be hilarious for Microsoft to demonstrate just how meaningless all their PR is. It would be a showcase of how hollow their "Better For Gamers" & "More choice" PR actually was.

Forget shooting themselves in the foot. This move would be a bazooka to the chest level of catastrophic. Which is why I find it difficult to believe.

Even if possible, why would Kottick agree to this? Microsoft probably isn't the only company that would be interested in buying them and they're doing much better now on their own.

 

[Calverz]

Is this where I post the screenshots of all the gaffers calling me names for suggesting that MS may just carve out the UK?

 

[Lasha]

Even if possible, why would Kottick agree to this? Microsoft isn't the only company that would be interested in buying them and they're doing much better now on their own.

Exiting the UK as a business doesn't stop selling products to the UK. The difficulty of moving out of the UK really depends on how much actual development is done there. Relocating or letting go a few hundred people to close a major deal may be worth attempting.

 

[feynoob]

Exiting the UK as a business doesn't stop selling products to the UK. The difficulty of moving out of the UK really depends on how much actual development is done there. Relocating or letting go a few hundred people to close a major deal may be worth attempting.

And if the deal fails, Activision will lose UK and will be subject to a harsh laws.

Existing UK doesn't guarantee the deal to close down. MS needs to win against FTC for that to happen.

 

[BoxFresh123]

Microsoft Authorized Reseller....

 

[Dick Jones]

Microsoft making outlandish claims before the next CAT meeting in the hope the judge will take pity on their plight. It's sabre rattling and nothing more. Microsoft shareholders would sue and demand Nutella and Spencer be fired into the sun.

 

[Topher]

Besides the echo chamber consensus of about a dozen armchair regulators in this thread, what proof is there that it's absolutely impossible for this deal to close in a way that won't violate UK law?

If the specific objection is cloud and CMA won't accept remedies related to cloud, you can be sure that one of the things Microsoft is looking at is options that could exclude their cloud gaming offerings from the UK cloud gaming market. That would allow all of these other growing cloud gaming companies the CMA is worried about to compete free of Microsoft's influence there. The downside would be that UK consumers miss out on Microsoft's cloud offerings, but going by the prevailing sentiment on this forum nobody cares about cloud gaming, anyway. If the revenue potential of the acquisition exceeds lost revenue from a modified GPU offering in the UK then it's probably on a whiteboard somewhere as a potential path to resolution.

Next someone is going to say that it's not possible for Microsoft to segment the business that way and that they would have to completely stop doing business in the UK, removing Windows, Office and Azure along with Xbox. Or that the Xbox business would have to completely leave the UK. I've been following along and I don't see where either of those assertions have been proven true. The CMA decision to block is based specifically on concerns about the cloud market, not the total gaming market, and the CMA has already declared that the whole COD thing is fine and wouldn't harm competition in the UK. If Microsoft divest or eliminate the portion of their business in the UK that conflicts with UK regulation then the letter of the law is likely satisfied, even though the spirit of the law has been trampled to death. The CMA most likely can't tell Microsoft that they must deliver cloud gaming offerings to the UK to be able to do business there.

So....you start off making sarcastic remarks about all the "armchair regulators in this thread" and then throw your hat into the ring and become one yourself? Uh.....ok. Welcome to the Armchair Regulators Club then.

I don't recall saying anything was "absolutely impossible". There is a legal order in place from the CMA prohibiting MS acquisition or investment in ABK. Thus, the very important key words you highlighted in my post "as things currently stand".

Carving out UK cloud gaming market is fine, but it doesn't get you around the order prohibiting the acquisition. The UK M&A lawyer on Gaz's podcast that was post prior made that point explicitly.

I think you need to read the CMA's order because every solution you are coming up with still involves Microsoft acquiring ABK. As things stand, that isn't legally an option in the UK. The basis of the decision is cloud, yes. The decision itself is prohibition of the deal. That is where things are right now so everything you read from me is going off of that status.

Here is the link to the draft of the final order:

https://assets.publishing.service.gov.uk/media/6465ec16e14070000cb6e181/Draft_final_order__.pdf

Microsoft needs to get some kind of favorable ruling from the CAT in order to salvage the deal. Granted, Microsoft has hired some damn smart people and their ability to pull a rabbit out of hat shouldn't be entirely ignored.

 

[Three]

What proof is there that it's absolutely impossible for this deal to close in a way that won't violate UK law?

If the specific objection is cloud and CMA won't accept remedies related to cloud, you can be sure that one of the things Microsoft is looking at is options that could exclude their cloud gaming offerings from the UK cloud gaming market. That would allow all of these other growing cloud gaming companies the CMA is worried about to compete free of Microsoft's influence there.

Because it will violate it unless they win that judgement on appeal because the CMA decision wasn't remove yourself from cloud and you can have ABK. It was that a merger is prohibited to promote innovation and competition in cloud. Removing youself and the publishers from cloud providers entirely because you've pulled the content doesn't address that competition concern in the acquisition. In fact it makes it worse for cloud as a whole.

 

[Banjo64]

Is this where I post the screenshots of all the gaffers calling me names for suggesting that MS may just carve out the UK?

Do it, as long as you’re happy to be quoted when the deal either collapses this year or is referred back to the CMA without Microsoft carving out the UK

 

[DeepEnigma]

Microsoft Authorized Reseller....

Astroturfer by day, product fencer by night.

 

[Topher]

Astroturfer by day, product fencing by night.

Florian gets around, don't he?

 

[Lasha]

And if the deal fails, Activision will lose UK and will be subject to a harsh laws.

Existing UK doesn't guarantee the deal to close down. MS needs to win against FTC for that to happen.

Activision may want to exit anyways since the CMA's arguments against Microsoft will carry over to other potential acquirers. UK wouldn't be lost regardless since you don't need to have a UK entity to sell products to the UK. Activision doesn't have a subsidiary in each country that it sells games.

 

[DeepEnigma]

Some people are really pushing the exit Kool Aide. It’s like clockwork, the scripts.

 

[dotnotbot]

Exiting the UK as a business doesn't stop selling products to the UK. The difficulty of moving out of the UK really depends on how much actual development is done there. Relocating or letting go a few hundred people to close a major deal may be worth attempting.

Well, so much for the deal being good for Activision workers then. Would be funny to see that argument suddenly become forgotten.

 

[PaintTinJr]

Besides the echo chamber consensus of about a dozen armchair regulators in this thread, what proof is there that it's absolutely impossible for this deal to close in a way that won't violate UK law?

If the specific objection is cloud and CMA won't accept remedies related to cloud, you can be sure that one of the things Microsoft is looking at is options that could exclude their cloud gaming offerings from the UK cloud gaming market. That would allow all of these other growing cloud gaming companies the CMA is worried about to compete free of Microsoft's influence there. The downside would be that UK consumers miss out on Microsoft's cloud offerings, but going by the prevailing sentiment on this forum nobody cares about cloud gaming, anyway. If the revenue potential of the acquisition exceeds lost revenue from a modified GPU offering in the UK then it's probably on a whiteboard somewhere as a potential path to resolution.

Next someone is going to say that it's not possible for Microsoft to segment the business that way and that they would have to completely stop doing business in the UK, removing Windows, Office and Azure along with Xbox. Or that the Xbox business would have to completely leave the UK. I've been following along and I don't see where either of those assertions have been proven true. The CMA decision to block is based specifically on concerns about the cloud market, not the total gaming market, and the CMA has already declared that the whole COD thing is fine and wouldn't harm competition in the UK. If Microsoft divest or eliminate the portion of their business in the UK that conflicts with UK regulation then the letter of the law is likely satisfied, even though the spirit of the law has been trampled to death. The CMA most likely can't tell Microsoft that they must deliver cloud gaming offerings to the UK to be able to do business there.

It is still totally delusional.

The decision to block isn't a sum, but a product of its concerns and analysis and is indivisible.
Only by CAT appeal decision, or return to CMA phase 1 or 2 can the parts be used to arrive at a different outcome.

The idea of using legal technicalities to work around a UK regulator is farcical. We are the oldest democracy in the world and our laws are as much about the spirit - for which the law came about - as much as the technicalities of the text, even for small infractions of anything we apply the law. I offer up the case by which Stammer got his Knighthood over a lie about a speeding ticket and an MP and his wife went to jail over.

A $2T company flagrantly attempting to ignore - in this fully globalised market - the UK competition regulator's authority over a $70b acquisition would be like Microsoft declaring war on the UK legal system and they would be so FCUK for it, they'd regret they even considered it- invalidating all their copyrights, trademarks and patents in the UK would probably just be the starter of a five course banquet for them.

 

[Lasha]

Do it, as long as you’re happy to be quoted when the deal either collapses this year or is referred back to the CMA without Microsoft carving out the UK

Microsoft can't carve out the UK. Activision has to divest of its own volition to avoid falling afoul of merger laws. The only way Microsoft would carve out Activision is if it closed the deal in spite of the CMA and decided to tank the court case.

 

[feynoob]

Activision may want to exit anyways since the CMA's arguments against Microsoft will carry over to other potential acquirers. UK wouldn't be lost regardless since you don't need to have a UK entity to sell products to the UK. Activision doesn't have a subsidiary in each country that it sells games.

MS won't face anything here. They won't move their business. It's Activision that will do it.

So the loser in this case is Activision. Why agree with MS, when someone like Comcast is ready to buy you. Even Amazon might buy them in the process.

 

[DeepEnigma]

Well, so much for the deal being good for Activision workers then. Would be funny to see that argument suddenly become forgotten.

It was forgotten the moment MS let go of 10K the day after a private Sting concert in Devos for the “elite.”

Can’t “think of the workers” if they’re no longer workers.

 

[Banjo64]

If the specific objection is cloud and CMA won't accept remedies related to cloud, you can be sure that one of the things Microsoft is looking at is options that could exclude their cloud gaming offerings from the UK cloud gaming market.

You aren’t looking at this comprehensively.

The CMA are saying that Microsoft acquiring ABK in addition to their existing library, brand recognition and existing infrastructure would prevent a competitive market from emerging.

Microsoft removing xCloud from the UK is not an effective remedy for that.

The CMA have proposed effective remedies, they were all divestiture based.

 

[Three]

Activision may want to exit anyways since the CMA's arguments against Microsoft will carry over to other potential acquirers.

Like who? Whoever they are they won't have the same marketshare in cloud gaming and MGS.