The EU is a superior place to start a business, according to the president of Microsoft, who criticized the UK for blocking its acquisition of US gaming company Activision.
Brad Smith called the decision “bad for Britain” and Microsoft’s “darkest day” in Britain after 40 years.
The regulator replied that it must serve people “not by merging firms with commercial interests.”
Due to the United Kingdom’s action, the multibillion-dollar transaction cannot proceed globally.
Although US and EU regulators have not yet decided whether to sanction the deal, the UK regulator, the Competition and Markets Authority (CMA), stated: “Activision is intertwined across different markets; it cannot be separated for the UK.” Thus, this decision prevents the global transaction from occurring.
If the $68.7bn (£55bn) transaction had been approved, it would have been the largest takeover in the history of the gaming industry, and Microsoft would have acquired incredibly popular games such as Call of Duty, Candy Crush, and World of Warcraft.
Microsoft and Activision have both stated that they will appeal the CMA’s decision.
“Simple message”
Mr. Smith stated that Microsoft was “extremely dissatisfied” with the CMA’s decision, but that it was also “bad for Britain.”
It does more than ever before to shake our confidence in the future of the opportunity to grow a technology business in Britain,” he said.
“People in the United Kingdom are stunned, disappointed, and their faith in technology has been severely shaken.
The European Union is a more attractive location to start a business than the United Kingdom, according to this data.
A spokesperson for Prime Minister Rishi Sunak stated that Mr. Smith was incorrect when he stated that the CMA’s decision was detrimental to Britain and that the EU was a superior place to conduct business.
“Such claims are not supported by the facts,” the spokesman said. Adding that the size of the UK games industry had doubled over the past decade.
He stated that the government would continue to engage with Microsoft, but emphasized that the CMA was independent.
The deal must be authorized by regulators in the United Kingdom, the United States, and the European Union to proceed.
The UK announced its decision first, but the US Federal Trade Commission challenged the transaction last year.
EU regulators postponed their decision in March after Microsoft proposed concessions to get the transaction approved.
The UK government wants “light-touch” science and technology restrictions after Brexit to boost economic growth.
However, the number of recent takeovers of British firms by foreign companies has increased concerns that the UK market is declining in significance and failing to attract rapidly expanding technology companies.
Microsoft has already stated that the decision could affect its UK investment.
Mr. Smith said the UK must “examine carefully the role of the CMA and the regulatory structure” to attract investment.
The United Kingdom is ‘open for commerce’
On The Today show, CMA CEO Sarah Cardell disagreed with Mr Smith.
She stated, “I believe this decision demonstrates how crucial it is to support competition in the United Kingdom and that the country is open for business.”
“We want to foster an environment in which a variety of businesses can compete effectively, grow, and innovate.”
In its Wednesday ruling, the regulator expressed concern that the transaction would stifle innovation and reduce gamers’ options in the rapidly expanding cloud gaming market, in which consumers purchase subscriptions to play games online.
Microsoft sees cloud gaming as the future and wants to increase its market position, therefore the combination is important.
Sony might better compete with Sony by acquiring Activision’s popular games.
Sony said the merger would give Microsoft an incentive to limit PlayStation access to Activision’s products, hurting gamers.
The CMA said a combination with Activision would “substantially strengthen” Microsoft’s 60–70% cloud gaming market share.
Ms. Cardell remarked, “This would be problematic because it would hinder the ability of other competing cloud platforms to compete effectively and offer the type of innovation and product choice we want to see in this market.”
Senior games analyst at Enders Analysis, Gareth Sutcliffe, stated that Microsoft had miscalculated its approach.
“It was evident for months that this deal was in trouble with UK regulators. But Microsoft executives did not prioritize it or pay attention to the evidence,” he told.
Mr. Sutcliffe added that Mr. Smith’s remarks about the United Kingdom were “somewhat superfluous.”
Microsoft had 16 months to change things, but they failed to convince.
