THE vice chair of Microsoft has said the European Union is “a more attractive place to start a business” than the UK following a watchdog’s decision to block the software company’s multi-billion pound takeover of gaming giant Activision Blizzard.
Calling it a “bad day for Britain”, vice chair Brad Smith slammed the decision from the Competition and Markets Authority (CMA), which blocked the $68 billion dollar (£55 billion) merger due to concerns about “choice in cloud gaming".
He said the UK regulatory environment compared unfavourably with the EU and warned the “English Channel has never seemed wider”.
He told BBC Radio 4’s Today programme he was “very disappointed” at the move and that it was “probably the darkest day” in its 40-year history in the UK.
“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 than the United Kingdom,” he said.
“I think the impact on the UK, unfortunately, is to shake the confidence among the business community in the UK, and the CMA as a regulatory agency.
“This decision, I have to say, is probably the darkest day in our four decades in Britain. It does more than shake our confidence in the future of the opportunity to grow a technology business in Britain than we’ve ever confronted before.”
He added that the UK Government “needs to look hard at the role of the CMA, this regulatory structure in the United Kingdom, this transaction and the message that the United Kingdom has just sent to the world”.
But the CMA defended its decision to block Microsoft’s deal for Activision and said the UK was “absolutely open for business”.
Xbox owner Microsoft struck a deal to buy the maker of Candy Crush and Call Of Duty in January 2022.
But the CMA said the tie-up would make Microsoft stronger in cloud gaming – where video games are played using remote servers and have no need for downloads – “stifling competition in this growing market”.
It claimed that Microsoft already accounted for between 60% and 70% of cloud gaming services.
Microsoft submitted a proposal in an effort to address concerns but the watchdog said this contained a “number of significant shortcomings”.
Microsoft and Activision have both said they will appeal the decision.
Downing Street dismissed criticism of the UK’s position as a place for tech firms to invest.
Prime Minister Rishi Sunak’s official spokesperson said: “Those sorts of claims are not borne out by the facts.”
He added that the UK’s games market had doubled in size to £7 billion over the past decade.
CMA head Sarah Cardell insisted the regulator wanted “to create an environment where a whole host of different companies can compete effectively, can grow and innovate”, claiming this was the “best thing for consumers and businesses”.
She told BBC’s Today programme that after a “long and careful investigation” into the Microsoft deal, “combining those two businesses would really reinforce Microsoft’s strong position in cloud gaming”.
“That would be problematic because it would really harm the ability of other platforms to compete effectively.
“We’re not alone. In the US the Federal Trade Commission is suing to block the deal, there is a lot of alignment there.”
With the deal blocked in the UK, Microsoft will be looking to regulators in the US and EU to allow it before it can be finalised worldwide.
The EU’s European Commission is expected to make its decision on May 22.
