Following the European Union's decision to approve Microsoft's offer to acquire Activision Blizzard for $68.7 billion, the UK's equivalent regulator, the Competition and Markets Authority, didn't lose any time to voice its criticism and maintain its position in a series of tweets.

　　The CMA had blocked the deal in late April largely because it considered Microsoft's cloud gaming market share already dominant with an estimated 60-70%, which could grow even further with the power of Activision Blizzard's prized IPs.

　　However, that figure has been criticized by many analysts and industry members as unlikely to reflect the actual market conditions. In a report penned yesterday by the Financial Times, an EU official was quoted saying that the CMA had overstated Microsoft's share in cloud gaming by including many Game Pass subscribers who don't actually take advantage of cloud services.

　　To understand that reference, we need to take a step back. In August 2020, Microsoft announced that Game Pass Ultimate subscribers would get access to cloud gaming via the service previously known as xCloud. It was meant as a bonus perk to entice Xbox users to start playing on their mobile devices, such as phones and tablets. Later, it was expanded to PC and even older Xbox consoles, allowing Xbox One players access to Xbox Series S|X exclusives.

　　However, it is widely believed that a substantial portion of Game Pass Ultimate subscribers either tried xCloud once or twice and never looked back or didn't even bother checking out, having access to local PC or Xbox consoles capable of running the titles available in the Game Pass library. In some countries, xCloud isn't even available yet.

　　Moreover, while Game Pass Ultimate includes cloud gaming, the base Game Pass tier does not. Microsoft never publically shared numbers of the Game Pass base vs. Ultimate split. Last we heard (January 2022), Microsoft announced that its subscription service had over 25 million subscribers in total.

　　A further objection shared by the EU official with the FT is that the cloud gaming market isn't a separate nascent market as envisioned by the CMA but a mere small segment of the overall gaming market. That's a belief shared by many industry analysts, including Karol Severin from MiDIA Research, whom I recently spoke with.

　　The European Union regulator shared the following infographic to show that the small cloud gaming market (€300 million in EEA vs. €6 billion earned by consoles) would actually benefit from these remedies since all providers (globally, as confirmed by Microsoft) are getting a free 10-year license to stream Activision Blizzard games, currently inaccessible on most cloud platforms.

　　It is, after all, why cloud gaming providers like NVIDIA and Boosteroid have proclaimed their support for the deal.

　　Back to the first point regarding Microsoft's market share in cloud gaming, this wouldn't be the first time the CMA made miscalculations during the investigation of the Microsoft/Activision Blizzard deal.

　　It already happened with regard to the console gaming market. At first, the Competition and Markets Authority said that Microsoft had reason to make Call of Duty partially or totally exclusive to Xbox consoles. A month and a half later, the CMA had to revise its financial models and reached a different conclusion: it wouldn't be convenient for Microsoft to remove Call of Duty from PlayStation consoles.

　　Still, it doesn't look like the CMA is budging this time around, so Microsoft and Activision Blizzard (which praised the EU's decision) will have to appeal to the CA Tribunal. Meanwhile, the European Games Developer Federation (EGDF) also welcomed the decision and the remedies requested by the EU regulator, believing that the ruling will lead to an increase in investments in content made in Europe.