The CMA originally blocked the acquisition due to cloud gaming needing a free, competitive market to drive innovation and choice. CMA panel chair Martin Coleman said Microsoft already holds a powerful position in cloud gaming, and the deal would “strengthen that advantage giving it the ability to undermine new and innovative competitors.”

Last week, Microsoft officially filed an appeal with Britain’s Competition Appeal Tribunal (CAT) in response to the ruling. On Friday, a summary of the arguments presented by Microsoft in its appeal was published.

“The CMA’s decision is flawed for multiple reasons, including its overestimation of the role of cloud streaming in the gaming market and our position in it, as well as its unwillingness to consider solutions that received overwhelming industry and public support,” said Rima Alaily, Microsoft’s corporate vice president and deputy general counsel.

Microsoft is looking to quash the decision made by the CMA in its entirety based on the following grounds: 

1. There were “fundamental errors” made in assessing Microsoft’s position in the cloud gaming industry. According to Microsoft, the CMA failed to consider the constraints of “native gaming,” which is where gamers access games installed on their devices through download or physical disc.
2. Microsoft says the CMA did not properly consider multiple long-term commercial agreements between Microsoft and cloud gaming providers. The agreements involved licensing of rights to stream games, including Activision games, after the merger. 
3. Microsoft found that the CMA, assuming Activision would have made cloud gaming content regardless of its merger with Microsoft, was “irrational,” and reached in a procedurally unfair manner.  
4. The CMA’s assumption that Microsoft would withhold Activision gaming content from rival cloud gaming services were reached through errored analysis. Errors include wrongly relying on evidence regarding certain games, not considering immediate losses from hypothetical foreclosure, and not considering out-of-market constraints or commercial agreements. All of which make the analysis “unlawful, irrational, and disproportionate,” according to Microsoft. 
5. Finally, Microsoft says that the CMA incorrectly believed it had a legal obligation to impose a comprehensive remedy, neglecting to consider a variety of potential solutions and evaluate their advantages and disadvantages. According to Microsoft, the CMA also failed to consider the interests and cooperation of other relevant parties, as well as rejected the Microsoft Cloud Remedy. Microsoft claims this is in violation of both the common law duty of fairness and the CMA’s own guidance on remedies.

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Microsoft will also be asking the CMA to pay the costs of this application, and any further relief as the tribunal sees fit. 

“We are confident in the strength of our appeal and the binding commitments we have made to increase competition and choice for players today and in the future,” said Alaily.