Microsoft States Xbox Is “Last Place” in Consoles, and Seventh in PC as CMA Voices Monopoly Concerns

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As part of its response to the CMA’s Phase One decision in the Activision deal inquiry, Microsoft has clarified that it is not seeking to bring down other cloud gaming providers. It claims that as Xbox is “last place” in the console market and generally remains behind competitors in other markets as well, foreclosing rival services would only reinforce the power of the existing market leaders and harm Microsoft’s cloud gaming ambitions.

After talks with Google and PlayStation over Microsoft’s plans to acquire Activision-Blizzard, the UK’s Competition and Markets Authority (CMA) published a full report about its decision to refer its inquiry into the $68.7 billion deal for a thorough second-phase investigation. The Verge’s Tom Warren published excerpts of Microsoft’s lengthy response to the decision today.

Besides dismantling PlayStation’s accusations of anti-competitive behavior with regards to the future of Call of Duty, Microsoft has also rebuffed concerns about its infrastructure advantage with cloud gaming and Xbox Game Pass, and the notion of rival services relying on its technologies.

In its response, Microsoft accuses the CMA of failing to provide any evidence for its claim that the combination of the Windows OS and the Azure cloud hosting service disadvantages rivals or forces them to rely on Microsoft’s infrastructure. It further posits that the rise of other cloud gaming providers (such as Google Cloud for Stadia, or AWS for Amazon Luna) is proof of the fact that Microsoft’s “multi-product” ecosystem does not threaten emerging competition.

Cloud gaming as a service does not enjoy great consumer appeal, and Microsoft claims that it wants to encourage other providers to implement cloud gaming tech in order for the business to succeed. The company notes that its Xbox gaming brand occupies “last place” in the console market, comes in seventh in the PC market and has no real presence in mobile game distribution worldwide. As such, by “harming or degrading” rival services, it would only be reinforcing the market position of the current industry leaders on each platform against itself by actively impeding cloud gaming adoption and development.

Phase Two of the CMA’s investigation has a statutory deadline of March 1, 2023, by which time the acquisition is expected to have obtained approval elsewhere. Regulatory authorities in Brazil and Saudi Arabia have already approved the deal as of last week.

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