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Court Rules Against FTC To Keep Microsoft’s Activision Deal From Closing Pending Antitrust Trial

from the the-beginning-of-the-end dept

And away we go. The ongoing saga that is Microsoft’s attempt to acquire Activision Blizzard has been going on for months now, with a flurry of news and activity occurring over the past couple of those months as the deal sits before three major regulatory bodies in the EU, the UK, and here in America. If you’re keeping score at home, the EU has already approved the deal, the UK’s CMA blocked it pending Microsoft’s appeal, and the FTC filed an antitrust suit and requested a preliminary injunction barring the deal from going through until that litigation is complete.

That injunction hearing was a mess from the start, with Microsoft promising not to consummate the deal until all litigation with regulatory bodies had been resolved, but then the company turned around and opposed the injunction anyway. Over five days, the court heard testimony from both sides, with the FTC pointing out just how many first party Microsoft titles were being released as exclusives as evidence that it would do likewise with Activision Blizzard titles. Sony stepped in with its own anti-competitive behavior for some reason, while Microsoft appears to have outed Sony’s plans for new consoles in its own filings.

And now the court has ruled for Microsoft on the injunction, which frees Microsoft to complete the deal, though, again, Microsoft promised not to until all litigation with regulators is complete. In the ruling itself, the court essentially takes all of the deals Microsoft announced with cloud and console providers to keep Call of Duty multi-platform for 10 years as proof that the FTC is being alarmist. And, the court adds, the FTC hasn’t shown it’s likely to win on its larger antitrust suit.

Microsoft’s acquisition of Activision has been described as the largest in tech history. It deserves scrutiny. That scrutiny has paid off: Microsoft has committed in writing, in public, and in court to keep Call of Duty on PlayStation for 10 years on parity with Xbox. It made an agreement with Nintendo to bring Call of Duty to Switch. And it entered several agreements to for the first time bring Activision’s content to several cloud gaming services. This Court’s responsibility in this case is narrow. It is to decide if, notwithstanding these current circumstances, the merger should be halted—perhaps even terminated—pending resolution of the FTC administrative action. For the reasons explained, the Court finds the FTC has not shown a likelihood it will prevail on its claim this particular vertical merger in this specific industry may substantially lessen competition. To the contrary, the record evidence points to more consumer access to Call of Duty and other Activision content. The motion for a preliminary injunction is therefore DENIED.

What’s odd in that is it’s sort of besides the point the FTC was making. The court is essentially saying that regulatory efforts caused Microsoft to ink these temporary, non-exclusivity deals for one game franchise, almost congratulating the FTC for doing so. But Call of Duty isn’t the only game franchise Activison Blizzard publishes. And the larger question about whether other titles would be made Microsoft exclusives goes mostly unanswered, other than the court pointing out that Minecraft is still multi-platform post Microsoft’s acquisition.

Will Microsoft keep to its public commitment to not complete the deal until the antitrust suit and CMA appeal is complete? I doubt it. It has little incentive to do so. Completing the deal makes the job of the regulators all that much more difficult, as courts are rarely willing to roll back already completed deals like that.

Add to all of this that we’re starting to see signals that Microsoft thinks it’s going to be able to get its issues with the CMA resolved in the UK as well.

Minutes after Judge Corley’s decision, both the CMA and Microsoft have agreed to pause their legal battle in the UK to negotiate how the Activision Blizzard deal could be modified to address the CMA’s cloud gaming concerns.

That’s about as public an indication as we’re going to get that a deal will be worked out to allow the purchase to move forward there, as well. As Kotaku notes, the FTC can appeal, but that isn’t generally what happens in our toothless regulatory climate, nor is it likely to ultimately torpedo the acquisition.

The FTC can try to appeal the ruling, and still has its own anti-trust lawsuit in the works, but both appear unlikely at this juncture to derail the deal. The last obstacle in Microsoft’s way, the Competition and Markets Authority (CMA) blocking the deal in the UK, also appears to be disappearing. Microsoft President Brad Smith tweeted that it is currently set to negotiate with the CMA on final remedies to win back approval for the deal.

And so it seems likely this deal goes through, after all. So sit back, relax, and start taking bets on the over/under in months before we start doing posts on all the promises Microsoft made throughout all of this that it subsequently breaks.

Filed Under: antitrust, call of duty, cloud game, cloud gaming, competition, ftc, video games
Companies: activision blizzard, microsoft

Whoa: UK’s CMA Blocks Microsoft’s Acquisition Of Activision Blizzard

from the it's-not-over-yet dept

We’ve been following the entire saga of Microsoft’s proposed acquisition of Activision Blizzard for some time now. The whole thing has been decidedly messy, for various reasons. For starters, there are three main regulatory bodies that most of us have been waiting to hear from: the UK’s CMA, the USA’s FTC, and the EU. And those bodies have been in different places and on different timelines to date. The EU gave its tacit approval to the deal, while the FTC signaled it wanted more information before making any decisions, while the CMA has voiced some very serious concerns about approving the deal. If you’re an American reading this, you may be conditioned to roll your eyes at all of this talk of regulation. The FTC in this country has behaved largely as though it lacks fangs when it comes to antitrust activity.

Which is why it may come as a surprise that the UK’s CMA has issued its final report in favor of blocking the purchase entirely.

The final report cites Microsoft’s “strong position” in the cloud-gaming sector, where the company has an estimated 60 to 70 percent market share that makes it “already much stronger than its rivals.” After purchasing Activision, the CMA says Microsoft “would find it commercially beneficial to make Activision’s titles exclusive to its own cloud gaming service.”

As to all of those largely cloud-gaming based deals Microsoft inked to keep AAA titles like Call of Duty on those platforms and the company’s argument that this showed its commitment to robust competition and non-exclusivity in the market, well:

Specifically, the CMA said Microsoft’s proposed remedy doesn’t sufficiently cover “multigame subscription services,” or providers working with “games on PC operating systems other than Windows.” Microsoft’s proposed standardized cloud-gaming licensing terms would also prevent those deals from being “determined by the dynamism and creativity of competition in the market” the CMA said.

“Accepting Microsoft’s remedy would inevitably require some degree of regulatory oversight by the CMA,” the regulator said in a press release. “By contrast, preventing the merger would effectively allow market forces to continue to operate and shape the development of cloud gaming without this regulatory intervention.”

What a breath of fresh air. Whether you agree with the CMA’s assessment or not, it’s quite nice to see a regulatory body show its teeth a bit, particularly when the focus is squarely on which outcome actually benefits the market and consumers more.

Now, all of this comes with the stipulation that Microsoft can, and will, appeal this decision. And, as you might expect, the promise to appeal comes along with Activision and Microsoft throwing all kinds of public temper tantrums over the final report.

“The CMA’s report contradicts the ambitions of the UK to become an attractive country to build technology businesses,” Activision Blizzard’s Joe Christinat said in a statement provided to Ars Technica. “We will work aggressively with Microsoft to reverse this on appeal. The report’s conclusions are a disservice to UK citizens, who face increasingly dire economic prospects. We will reassess our growth plans for the UK. Global innovators large and small will take note that—despite all its rhetoric—the UK is clearly closed for business.”

Trying to read that statement without rolling your eyes takes the kind of fortitude of which I am not made. And, frankly, this only effects the UK market. But, and here’s where this might be more important, the decision does serve as a first-to-plunge rejection with the FTC’s suit to block the deal having not even begun yet, and with the EU’s formal decision not yet in place.

So the real question isn’t solely what happens in the UK, but how this decision might effect the decisions of the EU and American markets, which represent huge risks to this deal.

Filed Under: antitrust, cloud gaming, cma, competition, speculative, uk
Companies: activision, activision blizzard, microsoft

Google Stadia's Failure Is Almost Complete

from the deprioritized-indeed dept

Tue, Feb 8th 2022 12:17pm - Karl Bode

While Google’s Stadia game streaming service arrived with a lot of promise, it generally landed with a disappointing thud. A limited catalog, deployment issues, and a quality that couldn’t match current gen game consoles meant the service just never saw the kind of traction Google (or a lot of other people) originally envisioned. In the years since, developers have been consistently abandoning the platform, and Google has consistently sidelined the service, even shutting down its own development efforts as a parade of executives headed for the exists.

Now, Google is basically just selling the technology off to other companies eager to give video game streaming a go and succeed where Google couldn’t.

In the last few months, Google executives have apparently been working on a plan to salvage some aspect of the project by selling Google Stadia tech to companies like Bungie and Peleton. In short, these companies will license the Google tech (now creatively named “Google Stream”) for use in their own game streaming services called something entirely different. Google’s first party Google Stadia service still exists for now, but it has been “deprioritized” within the company on the way to an inevitable, untimely death:

“The Stadia consumer platform, meanwhile, has been deprioritized within Google, insiders said, with a reduced interest in negotiating blockbuster third-party titles. The focus of leadership is now on securing business deals for Stream, people involved in those conversations said. The changes demonstrate a strategic shift in how Google, which has invested heavily in cloud services, sees its gaming ambitions.”

Unfortunately (for Google) Sony just bought Bungie for $3.6 billion, and already has its own streaming technologies and platforms that Bungie will likely use (Sony also leans on Microsoft’s cloud technology). And while Google also has been working on a game streaming deal with AT&T, such “me too” type efforts from the telecom sector never quite amount to much. That leaves Peloton, which is being rumored as an acquisition target by Amazon, and isn’t doing gaming so much as it’s doing the gamification of exercise.

Somebody will dominate the game streaming space, but it’s not going to be Google. While the Google technology certainly works well, the business plan was an unmitigated failure by any measure. And much like Google Fiber (which Google eventually got bored with and froze without ever really admitting to anybody that’s what happened), Stadia will die without being formally declared as dead, having never seen even a fraction of its originally envisioned potential.

Filed Under: cloud gaming, failure, google stream, infrastructure, stadia, streaming, video games
Companies: google

Slow Broadband, Usage Caps Could Mar Google Stadia's Game Streaming Ambitions

from the ill-communication dept

Thu, Mar 21st 2019 06:16am - Karl Bode

I can remember being at E3 in 2000 and being pitched on the idea of a sort of “dumb terminal” for gaming. As in, you wouldn’t need a computer or game console in your home, since all of the actual game processing would be accomplished in the cloud then streamed to your TV via broadband. Most of these early pitches never materialized. Initially because cloud computing simply wasn’t fully baked yet, but also thanks to America’ shoddy broadband.

Cloud-based game streaming is something the industry has continued to push for, though nobody has yet to truly crack the market. Onlive probably tried the hardest, though again a lack of real cloud horsepower and sketchy residential broadband prevented the service from truly taking off.

Undaunted, Google took to the stage at the Game Developers Conference to unveil Stadia, a looming game streaming platform that will let gamers play top-shelf games on any hardware with a Chrome browser. Google insists that the service, when it launches this summer, will be able to drive games at up to 4K resolution and 60 frames per second seamlessly between multiple devices with no need for game consoles, high-end PCs, loading times, or installs. The whole presentation is available here:

If anybody can make the idea work it’s certainly Google, whose massive transit and cloud computing firepower should give it a leg up on past efforts. Unfortunately for Google, the service still faces a daunting foe. One Google has previously tried and failed to disrupt: the shoddy state of US broadband:

“Generally, streaming a game at 1080p requires latency of less than 20ms and downstream speeds of at least 25 Mbps. But raw throughput is just one of numerous factors that can impact the responsiveness of game streaming. Upstream speeds, the quality of your router, and even congestion at internet peering and interconnection points can impact game play.

Google hopes to sidestep some of this by having the lion?s share of the streaming traffic travel over its own datacenter and transit links. But that data still needs to make its way to your home via the ?last mile,? or your ISP. And if your ISP is terrible, your Google Stadia experience is likely to mirror that reality.”

In addition to slow speeds (thanks to countless US telcos that refuse to upgrade their networks), Google’s new service will also need to contend with the bullshit, arbitrary usage caps and overage fees giants like Comcast have been imposing on their networks in the wake of little to no real competition. While there are not many services that can blow through Comcast’s 1 terabyte cap ($10 per each additional 50 gigabytes thereafter), streaming games at 4K or 8K certainly will. Many ISPs, especially slower telcos, impose usage caps that are far less generous.

The other issue to keep an eye on will be net neutrality. ISPs like Verizon are working on their own game streaming services. Given that incumbent ISPs are already removing usage caps if you use their own video streaming service, there’s really not much stopping an ISP from doing the same thing with gaming. It’s the culmination of a vision telecom giants like Verizon, Comcast, and AT&T have had for years, where they impose arbitrary and unnecessary restrictions and caveats to simultaneously cash in on–and disadvantage–companies they want to directly compete with. If you can’t win, cheat.

Given its cloud firepower Google can certainly pull the idea off. And if Google doesn’t, somebody else will. Replacing high-end PCs and pricey game consoles with a simple cloud-based, multi-device game streaming subscription service seems like the obvious next step. But the process is going to once again shine a light on how the broken, monopoly-dominated telecom sector has some very real problems tech refuses to address and fix. Problems that harm not only the public, but countless attempts to innovate and disrupt other, existing sectors. Game streaming is going to shine a very bright light on this reality.

Filed Under: broadband, cloud gaming, competition, stadia, streaming, video games
Companies: at&t, google, verizon

Shouldn't The Patent Office Be Able To Reject A Bad Patent Application For Real?

from the just-a-thought dept

A few people have been submitting various versions of the story about how online gaming company OnLive is claiming a patent on its system for cloud-based video games. You can see the actual patent (7,849,491), if you’d like to dig into the details.

However, rather than dig into the specifics on this particular patent, I did want to dig into one somewhat offhand comment that Dean Takahashi made in his writeup of this patent over at VentureBeat, where he gets in a little dig at the Patent Office:

it was originally filed in December, 2002… The patent was granted last week, showing just how far behind the patent office is in acknowledging inventions.

Similarly, in the WSJ article where OnLive’s Steve Perlman claims this is a “pivotal patent,” he also complains about how slow the patent office is, and how annoying it was that he had to wait so long to get this patent.

Now, I’m not known for standing up for the Patent Office on much, and everyone seems to agree that the USPTO has a huge backlog that it takes them a while to get through, but the implication here is that if you just submit an application, you’ll have to wait 8 years to get that patent approved. That’s not really fair or accurate. I went and looked at the history of this particular patent and it’s a lot more complicated than that. First of all, while it was initially filed in 2002, the application wasn’t actually complete until April of 2003. Then, it appears that a whole bunch of additional information was filed over the years — which is perfectly fine (as new things come out, you’re supposed to file such information disclosure statements), but each of those need to be reviewed as well.

But what’s a lot more telling is that the patent was “rejected” by the patent examiner not once, not twice, not three times, not four times, but five times before it was finally approved. However, the way the patent system works is that there’s no such thing as a real rejection of a patent application. Even if there is something called a “final rejection” (the second rejection here was officially a “final rejection”), that’s clearly misnamed, as the applicant is able to keep requesting new examinations, perhaps with adjustments to the patent, or after the applicant (or, more likely, a patent attorney they hired) argues that the patent should be approved.

So, perhaps it’s not just that the patent office is “behind” on “acknowledging inventions,” it’s that patent applicants can just keep trying and trying and trying over and over and over again until they finally convince the examiner to approve the patent. Of course, all of this does contribute to the actual backlog — because each time the examiner has to deal with a “rejected” application request for another examination, and hear them out on why it should be approved, or review the changes, that’s time that could be spent reviewing a different patent application.

What I still don’t understand is why we still let the system work this way. I can understand being able to make your case as to why a patent should be approved after an examiner initially rejects it — and perhaps potentially an opportunity for an appeal — but why do we let the system be so open ended? And, to be clear, I’m not saying if this particular patent is a “bad patent.” I really don’t know (though, I assume some of you may have some opinions on that). I’m just pointing out that, contrary to the claim in that article, the delay here might not have just been about a slow patent office, but about the fact that the patent was “rejected” so many times, and each time OnLive was able to come back and get another crack at the apple…

Filed Under: cloud gaming, patents, rejections, steve perlman, video games
Companies: onlive, uspto