By Sagar V. Mankar After harshly criticizing UK regulators last year for initially blocking Microsoft’s Activision Blizzard acquisition, Brad Smith now sings a different tune. Microsoft’s President now calls the UK Competition and Markets Authority (CMA) “tough but fair” after they ultimately approved the revised $69 billion deal.
However, the antitrust watchdog didn’t appreciate Microsoft’s strong-arm tactics before conceding changes.
A Change of Tune?
When the CMA rendered their first verdict denying the deal in April 2023, Smith ignited controversy by declarations that the UK was “bad for business” and confidence in the country was “severely shaken”. He even suggested the blockage made the EU a preferable alternative for Microsoft investments versus dealing with rigid UK regulators.
Given Microsoft’s commitment to create job-stimulating tech hubs in Britain, the comments raised alarms. However, with the CMA’s October 2023 conditional approval now secured, Smith significantly softened his tone.
He called the CMA “tough and fair” for pushing Microsoft towards “changes that we had proposed” involving “certain rights” related to cloud gaming.
By compelling Microsoft to guarantee Call of Duty’s multi-platform availability, Smith says the CMA created a “pragmatic path forward for innovation and investment”. The tense regulatory standoff ultimately strengthened the deal’s pro-consumer protections, though regulators admonished Microsoft’s initial hardline stance.
What CMA Chief have to Say?
However, CMA’s chief, Sarah Cardell, criticized Microsoft’s conduct, highlighting disagreements during the investigation and the company’s reluctance to adopt recommended measures. She called out Microsoft for obstructive negotiation tactics that “only wasted time and money”.
Cardell explains the CMA originally presented Microsoft with opportunities to restructure during early investigation stages. However, Microsoft declined changes by “insisting on a package of measures that we told them simply wouldn’t work.” This resistance dragged out the process for months until Microsoft returned to the compromise table.
Cardell considered this stonewalling in bad faith, questioning why Microsoft didn’t collaborate earlier. Nevertheless, Smith considers 2023’s conclusion with conditional approval a success demonstrating the CMA’s sound judgement.
CMA’s Concerns and Gaming Industry Impact
- Initial CMA Blockage: In April last year, the CMA blocked the acquisition due to concerns about potential negative effects on competition, innovation, and consumer choice in cloud gaming.
- Microsoft’s Restructuring: Facing rejection, Microsoft restructured its offer, agreeing to transfer streaming rights to Ubisoft, ensuring gamers on rival consoles can still access Activision games from the cloud.
Global Controversy and Mixed Responses
- Largest Takeover in Gaming History: Microsoft’s plan to acquire Activision Blizzard stirred global controversy, becoming the largest takeover in gaming industry history.
- Mixed Regulatory Responses: Regulators worldwide responded with mixed opinions, adding complexity to the already contentious deal.
Microsoft’s Commitments and Future Investments in the UK
- AI Infrastructure Investment: Beyond gaming, Microsoft pledged a £2.5 billion investment in AI infrastructure in the UK over the next three years.
- Participation in AI Safety Summit: Brad Smith commended the UK government’s bold commitment to AI infrastructure and highlighted his attendance at the “critical” AI Safety Summit in November.
In wrapping up this rollercoaster of a journey, Microsoft’s gaming power play with the Activision Blizzard acquisition highlights the intricate dance between tech giants and regulatory bodies.