The CMA’s decision not to approve Microsoft’s acquisition of Activision is a real blow to Microsoft’s business. And if the tone is warm in public communication, it’s not necessarily the same behind the scenes. After Activision’s threats, Microsoft follows suit and demands that Activision be withdrawn from this market.
Withdrawing Activision from the UK market, an “extreme” option Microsoft is considering
Reporting the news, Bloomberg first confirms that Microsoft Chairman Brad will meet with British Chancellor Jeremy Hunt next week to express his frustration.
Jeremy Hunt may have a sympathetic ear for Microsoft, who said last May that his country had concerns about its growth at a time when Activision was threatening to sell itself in the country if the CMA deal didn’t go through .
One of the reasons companies like Microsoft and Google want to invest in the UK is that we have independent regulators that are not controlled by politicians.
I don’t want to jeopardize that independence in any way, but I think it’s important that all of our regulators understand their broader responsibility for economic growth.
That last phrase from Treasury Secretary Jeremy Hunt was certainly met with interest from Microsoft, which may find an ally to sanction the acquisition in the country.
Bloomberg says on this page that one extreme option could be to circumvent the UK order and continue operations, or withdraw Activision from the UK market, said one of those familiar with the matter, confirming previous reports by the company. Regulatory news agency Mlex.
Activision is very upset with the CMA
Immediately following the announcement of the CMA, the President of Microsoft took the floor to express his regret that the agreement with Activision had not been approved by the UK antitrust authorities. In a very cordial tone, Microsoft made it clear that it would appeal, but regretted the regulator’s lack of understanding of the market, particularly in the cloud segment.
On the Activision side, however, the tone is a bit more virulent. Bobby Kotick, CEO of the inventor of Call of Duty, sent a note to his staff stating that upholding the CMA’s decision “would stifle investment, competition and job creation across the UK gambling industry”.
The Activision boss had already cracked down on the UK last February in response to Chancellor Jeremy Hunt’s declaration that he wanted to make the UK the “Silicon Valley of Europe”. Given the CMA’s reluctance to confirm the acquisition at this point, Bobby Kotick subsequently stated that blocking the deal could, on the contrary, result in the UK turning into a Death Valley. The atmosphere.
Even then, Bobby Kotick spoke of the impact on jobs in the country, but an Activision representative on the BBC microphone went further. “The CMA report goes against the UK’s ambitions to become an attractive country for technology start-ups,” he said, echoing statements by the big boss earlier this year.
The report’s findings are doing British citizens a disservice as their economic prospects grow bleaker. We will reconsider our UK growth plans. Global innovators big and small will find that for all the rhetoric, the UK is clearly out of business.
By causing Activision to reassess its growth plans in the UK, the CMA is clearly threatening to divest the land for other territories. It’s difficult to gauge the impact of such a threat, but chances are that intimidation doesn’t really allow for a constructive dialogue to develop.
And now ?
In its conclusions, the CMA ignored the console market, which seems unproblematic in this case, and instead emphasized cloud gaming. According to the organization, if the deal were confirmed, Microsoft’s position in this market would be problematic.
Microsoft already has a strong position and edge over other competitors in the cloud gaming space, and this deal would reinforce that advantage by giving it the ability to undermine new and innovative rivals.
While Microsoft presented plans to address the CMA’s concerns, these were deemed ineffective. “Cloud gaming needs a free and competitive marketplace to drive innovation and choice. The best way to do that is to continue allowing the current competitive dynamics of cloud gaming to do their job.”
Microsoft has appealed the CMA’s decision and a hearing is currently scheduled for July. Debates with the FTC in the US will also take place this summer.