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Platform Divergence and Geographic Divergence After Microsoft/Activision and Apple v. CMA

 |  October 9, 2023

By: Stjin Hujits (The Platform Law Blog)

In January 2022, we initially highlighted the Competition and Markets Authority’s (CMA) apprehensions regarding Apple’s obstruction of cloud gaming applications on the App Store (in contrast, Google permits these apps on the Play Store but does not allow in-app purchases to be conducted within cloud gaming apps). The CMA escalated this matter to a comprehensive market investigation on November 22, 2022. However, Apple successfully appealed this decision at the Competition Appeal Tribunal (CAT). Subsequently, the CMA was granted permission to challenge the CAT’s ruling in the Court of Appeal, a hearing likely to occur in the Autumn.

Simultaneously, cloud gaming played a pivotal role in the competition scrutiny of Microsoft’s acquisition of Activision Blizzard. The European Commission greenlit the deal, contingent on a 10-year commitment from Microsoft to grant access to Activision games on rival cloud gaming services. In the UK, the deal faced an initial outright block, but provisional clearance was granted when Microsoft submitted a “new” deal. This revised deal stipulated that Microsoft would not acquire cloud gaming rights to Activision games outside the EEA for an additional 15 years. During this period, Ubisoft would be authorized to utilize those rights.

Now that the dust is settling, it’s crucial to assess the current landscape of this innovative game distribution model, which unexpectedly emerged as a focal point in two significant competition developments in 2023.

Apple’s limitations persist

A swift examination of the App Store guidelines confirms that Apple is still impeding the inclusion of cloud gaming service apps on the App Store. Damien and I extensively discussed these concerns in the Interactive Entertainment Law Review. In essence, Apple mandates that each game must be separately submitted to the App Store. Consequently, every game must be individually downloaded to the user’s device as a standalone app. Apple argues that this is essential for security and privacy reasons. However, this insistence on distinct apps for each game restricts the primary benefit of a cloud gaming app for users: easy access, within a single cloud gaming provider’s app, to an array of games playable without the need to download each game as a separate app. The App Store Guidelines further stipulate that games “must use in-app purchase to unlock features or functionality, etc.” Consequently, game streaming does not enjoy the exemption from the obligation to utilize Apple’s in-app purchasing (IAP) system, a privilege granted to video and music streaming…