UK PM Rishi Sunak fires back at Microsoft president

The CMA blocked the deal over concerns that it would reduce innovation and limit gamers' choices in the rapidly expanding cloud gaming market.

Microsoft’s president, Brad Smith, criticized the UK’s Competition and Markets Authority (CMA) for blocking the company’s proposed acquisition of US gaming firm Activision. Smith told the BBC that the EU was a better place to start a business and that the decision marked Microsoft’s “darkest day” in its four decades of working in the UK.

The CMA’s decision prevents the $68.7bn deal from going ahead globally, as Activision’s presence is too intertwined in different markets to be separated for the UK. The acquisition would have given Microsoft access to popular game titles like Call of Duty, Candy Crush, and World of Warcraft.

Smith expressed his disappointment with the CMA’s decision, stating that it had shaken Microsoft’s confidence in growing a technology business in the UK. He added that the European Union was a more attractive place to start a business than the UK.

A spokesman for Prime Minister Rishi Sunak rejected Smith’s claims, citing the doubling of the UK games sector in size over the last decade. The spokesman emphasized the CMA’s independence and confirmed the government would continue to engage with Microsoft.

Post-Brexit, the UK government aims to implement “light-touch” regulations for science and technology to boost economic growth. However, recent overseas takeovers of British firms have raised concerns about the UK market’s attractiveness and ability to draw fast-growing tech firms. Microsoft hinted that the CMA’s decision might affect its UK investment.

CMA’s chief executive, Sarah Cardell, disagreed with Smith’s comments, arguing that the decision demonstrated the importance of supporting competition in the UK. Cardell said the goal was to create an environment where companies could effectively compete, grow, and innovate.

Microsoft sees cloud gaming as the industry’s future and aims to bolster its position. The deal would have also allowed the company to better compete with rivals like Sony.

Sony argued that the acquisition would incentivize Microsoft to limit access to Activision’s titles on PlayStation, negatively impacting gamers. The CMA noted that Microsoft already held a 60-70% share of the cloud gaming market, and merging with Activision would reinforce its dominance, hindering competition and innovation.

Microsoft and Activision plan to appeal the CMA’s decision. For the deal to proceed, it must be approved by regulators in the UK, the US, and the EU. While the UK is the first to announce its decision, the US Federal Trade Commission initiated a legal challenge to block the takeover last year. In March, EU regulators postponed their decision after Microsoft proposed concessions.

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