Microsoft criticises UK for ‘darkest day’ after Activision Blizzard deal blocked

Brad Smith claims confidence in technology in Britain had been ‘severely shaken’ by the decision

The Activision acquisition would have been the biggest yet in the gaming industry. Reuters
Powered by automated translation

Microsoft hit out at the UK competition watchdog on Thursday after a £69 billion acquisition that would have been felt around the gaming, AI and wider tech world was blocked.

Microsoft president Brad Smith said the decision to stop the deal for Activision Blizzard “had shaken confidence in the UK tech industry” and was “probably the darkest day in our four decades in Britain”.

The deal, scuppered by the Competition and Markets Authority on Wednesday, would have been the biggest ever in the gaming industry.

It centres on a row over whether Microsoft would be too powerful once it had the Activision stable that includes Call of Duty, World or Warcraft and Candy Crush — three of the biggest games in the market which are currently available on multiple platforms.

“If the government of the United Kingdom wants to bring in investment, if it wants to create jobs … it needs to look hard at the role of the CMA, the regulatory structure in the United Kingdom, this transaction, and the message that the United Kingdom has just said to the world,” Mr Smith said.

“There's a clear message here — the European Union is a more attractive place to start a business than the United Kingdom.”

CMA chief Sarah Cardell said its role was to ensure Britain enjoyed a competitive environment for businesses and consumers.

“That's important for UK consumers and UK business and it's those UK consumers and UK businesses that the CMA is here to protect,” she said.

Brad Smith said: 'The English Channel has never seemed wider in terms of Europe as a continent being attractive for investment.' Getty Images

She said the CMA acted independently of government and was accountable for the ruling.

“The decision that the CMA takes is an independent decision that we reached looking at an overall assessment of the impact of the deal on competition, and we think that is the right decision for the UK,” she added.

The EU and the US Federal Trade Commission have both previously questioned the deal.

But the ire of Microsoft and Activision is raining down on the CMA after it rejected the deal on Wednesday.

Mr Smith said: “The English Channel has never seemed wider in terms of Europe as a continent being attractive for investment, Brussels as a place where one can sit down and actually have a conversation with the regulators who are accountable to the elected leaders, and the difference we now confront in London, where we have regulators who are not only unelected, but unaccountable and now making decisions that just feel fundamentally unwise.”

Activision said it would “work aggressively with Microsoft to reverse this on appeal”.

A spokeswoman for Activision Blizzard said: “The CMA's report contradicts the ambitions of the UK to become an attractive country to build technology businesses.

“The report's conclusions are a disservice to UK citizens, who face increasingly dire economic prospects.”

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said the acquisition was important for Microsoft because it would supplement the group’s leading AI position.

The small but growing cloud gaming market has the potential to supplant the existing console rivalry between Xbox and Sony.

Streaming games to tablets, phones and other devices has freed players from buying expensive consoles and gaming computers.

“What the CMA said, essentially, is that in cloud gaming Microsoft is the market leader,” said Liam Deane, a game industry analyst at Omdia. “And even though that is a smaller market, it’s one that’s at a critical stage where it’s just starting to take off and potentially that is going to become a huge platform in the future. And therefore it would be a risk to competition to strengthen Microsoft’s position in that market where they’re already leading.”

Updated: April 27, 2023, 10:15 AM

View from London

Your weekly update from the UK and Europe

View from London