- Microsoft’s decision to block Activision’s takeover deal made British regulators a target of criticism.
- Executives and experts in the area agree that this decision becomes a negative precedent that drives away investors.
- Regulators argue that the merger endangers competition within the cloud gaming sector.
Numerous investors and executives from the technology sector criticized the decision of the British CMA to block Microsoft’s purchase of Activision. For these voices, the measure of the regulators becomes a serious damage that puts the future of the technology sector in the United Kingdom at risk.
On Wednesday (April 26), the Competition and Markets Authority (CMA) banned the $75 billion merger. Although Microsoft reached some agreements with competitors to cede the right to some franchises for 10 years, the regulators went another way.
According to regulatory authorities, the merger becomes a serious monopoly danger in the cloud gaming sector. The same consideration did not take place among competitors in the console sector. In any case, the representatives of the companies involved and a significant number of startups described the measure as a “fatal blow.”
It is worth mentioning that the government leadership of the European nation wants to turn the country into a technological epicenter. However, Critics consider that with these “arbitrary measures” they are going in the opposite direction.
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Is the UK’s tech future at risk?
For the CMA, the merger ban does not represent a risk for the United Kingdom in terms of the development of the technology sector. In contrast, the decision makes the British market an ideal site for competition, since monopoly behaviors by large companies such as Microsoft are rejected.
Of course, the directives of Microsoft and Activision were the first to react angrily to the measure. According to these companies, the blockade is “a hammer” for the English economy. “The measure discourages innovation and investment in the country,” said Microsoft President Brad Smith.
On Activision’s side they were more aggressive in their rhetoric and threatened to “reassess their growth plans within England”. They added that innovators of all sizes are “taking notice.” “Despite their rhetoric, the UK government is closing the doors,” they stressed.
The furious response from these companies sparked a flurry of reactions from companies across the country. In general terms, investors, entrepreneurs and executives from dozens of companies consider that the role of European epicenter of technology is fading.
With this in perspective, it can be said that the future leadership of the United Kingdom in the area of technology is indeed at risk. “The CMA decision does the opposite in terms of fostering innovation,” he tells FT Ophelia Brown, founder of the venture capital firm, Blossom Capital.
The CMA’s “Hawk Attitude”
Concerns are growing among tech industry leaders about what they call a hawkish attitude from the CMA. It should be remembered that last October the same agency ordered to Meta to reverse its agreement to purchase Giphy. On that occasion, the technology giant was forced to sell the gif creator.
It should not be forgotten that this blocking of the purchase agreement is the first of its kind against one of the big-techs. It is important to mention that the companies will appeal the decision of the regulars, but it is unlikely that it will be reversed. Likewise, it is highlighted that the EU regulators are also ready to make a decision on this issue this May.
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On the other side, in the United States, the authorities of the Federal Trade Commission launched an investigation with the aim of stopping the agreement.
Not everyone lashes out at the regulators’ move. Some side with the agency and trust that this measure ensures healthy competition between companies in the sector.
Compared to anyone else on the planet [la CMA] he has put himself in a position to understand what is happening in this field,” said William Kovacic, former non-executive director of the CMA. The agency itself responded in the same aggressive tone of the companies: “Our job is to do what is best for people, companies and the UK economy, not for mergers of companies with commercial interests.”
Whether or not this is a risk for the UK, he has no objection that it sets a precedent for future regulations.
