Microsoft’s president said the EU is a better place to start a business than Britain post-Brexit, as he launched a stinging attack on the UK’s decision to block a $69bn (£55bn) deal to takeover Activision Blizzard.
Brad Smith said people around the world were “shocked” by the Competition and Markets Authority’s (CMA) ruling against the takeover of the Call of Duty developer, suggesting it would cause businesses to think twice about investing and growing their businesses in the UK.
“We’re, of course, very disappointed about the CMA’s decision, but more than that, unfortunately, I think it’s bad for Britain,” Smith told BBC Radio 4’s Today Programme on Thursday.
“There’s a clear message here: the European Union is a more attractive place to start a business if you want some day to sell it. The English Channel has never seemed wider.”
He added: “For all of us who had some hope that post Brexit, the UK would construct a structure that would be more flexible, be better for investment, be better for technology, we’re now finding that the opposite appears to be true.”
The CMA decision would also “discourage innovation and investment in the United Kingdom. And I think in that sense, the impact of this decision is far broader than on Microsoft or this acquisition alone”, he said. “People’s confidence in technology in the United Kingdom has been severely shaken.”
On Wednesday, the UK’s competition watchdog blocked the $68.7bn takeover of Activision Blizzard because of concerns it would harm competition in the cloud gaming market. The tie-up would have created a gaming behemoth, merging Activision’s titles such as World of Warcraft, Hearthstone, Candy Crush Saga and Overwatch, with Microsoft’s first-party developers, its Xbox consoles and its control of PC gaming.
The Microsoft president said: “Microsoft has been in the United Kingdom for 40 years. And we play a vital role not just supporting businesses and nonprofits but even defending the nation from cybersecurity threats. But this decision, I have to say, is probably the darkest day in our four decades in Britain.”
The tech boss claimed he expected Brussels to approve the deal, saying its regulators were far more interested in having conversations and finding “solutions rather than reasons to block people from moving forward”. He also criticised the fact that the bosses of UK regulators were largely independent, calling them “unaccountable”.
The decision to block the acquisition is the first major act for the CMA’s new chief executive, Sarah Cardell, who joined the regulator in December 2022. Responding to Smith’s comments, she defended the decision to block the deal, saying: “I think this decision shows how important it is to support competition in the UK, and that the UK is absolutely open for business. We want to create an environment where a whole host of different companies can compete effectively, can grow and innovate. That’s the best thing for UK consumers, and the best thing for UK businesses.”
Despite Smith’s claim that the UK would find itself an outlier, other regulators have voiced concerns about the deal, in the US and the EU.
“We also have concerns, as explained in our complaint, about the anti-competitive effects of this deal,” said Holly Vedova, director at the Federal Trade Commission’s Bureau of Competition in the US.
The European Commission recently delayed its own findings until May to consider the effects of remedies proposed by Microsoft; the CMA had concluded those remedies would be insufficient to prevent the merger from warping the nascent field of cloud gaming.
How the UK government receives Smith’s comments, and similar threats from Activision Blizzard to “reassess our growth plans for the UK”, may depend on whether or not they are seen as coming from “big tech”. Rishi Sunak on Monday declared the country “Unicorn Kingdom” in an appeal to tech startups to head to Britain, and on Wednesday, just hours after the CMA reported its decision, hosted a meeting of UK gaming leaders to boast that “our globally renowned video games sector is attracting investment, creating skilled jobs and opening up exciting new opportunities for growth”.
But his government has been less accommodating to “big tech”, with the online safety bill prompting a showdown with Meta over end-to-end encryption and the digital markets, competition and consumers bill giving huge new powers to the CMA to regulate the largest tech companies in the world.
Activision and Microsoft have the opportunity to appeal to the Competition appeal tribunal. If they do, the body is expected to make a final decision before the end of the year.
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