[ad_1]
There is an unwritten rule in banking: don’t kill the controller. Certainly not in public, and certainly not when they’re about to gain new power over you.
No one told the tech giants.
Microsoft and game maker Activision Blizzard have reacted angrily to the UK competition authority’s decision to block their $75 billion deal last month. Activist called the issue “harmful to UK citizens” and said the country was “closed for business” due to “dire economic prospects”. Attractive.
Microsoft vice-chairman Brad Smith argued that the decision would “discourage innovation and investment,” and somewhat ironically noted the American company’s “crucial role . . . Protecting the Nation from Cyber Security Threats”
Vitriol has a negative effect. It shouldn’t have come as much of a surprise that the Competition and Markets Authority has opposed Microsoft’s takeover of Activis.
His main concerns, particularly about the emerging market for cloud gaming, where CMA said Microsoft had a 60 to 70 percent market share, are shared by regulators worldwide, including in the US and Europe. Although the European Commission is expected to approve the deal next week, it will be more comfortable with characteristic solutions, where Europe looks more global than the UK.
The CMA’s withdrawal of objections to console gaming in March may have boosted hopes of approval. More likely, experts say, the move reflects confidence in cloud gaming. Microsoft and Activision will take the decision up for judicial review.
But the reality is that the tech giants’ anger is not widely shared in the UK sector. So far, the five tech companies known as GAFAM — Google, Apple, Facebook, Amazon and Microsoft — have failed to acquire anything despite various corporate name changes: CMA approved Microsoft’s deal to buy artificial intelligence company Nuance last year. But their transactions clearly get a serious look. What is not known is how much the high-tech investigation – a global phenomenon – will play out for the rest of the market.
“The question is what makes them competitive with the big companies,” says Dom Halas of CODEC, a lobbying group for startups. “Who might buy UK startups depends on their choice to exit, but it will affect the future shape of the market. That’s why every CMA decision carries such weighted significance. In that sense, Adobe passed on its $20 billion purchase of design software company Figma or Broadcom’s $69 billion purchase of VMware.” Judgment may be more informative than Microsoft’s mega deal.
The tech frenzy seems to have sparked little anger — political or otherwise. If anything, CMA is increasingly making the case that vibrant, robust competition is good for business, innovation, customers and the economy. There’s a sense that the laissez-faire trend around the world has not worked, in technology in particular but more broadly. (Sarah Cardell, head of the CMA, recently pointed to private equity wrap strategies as a particular focus.) The UK is perhaps at the forefront of efforts to expand regulatory tools to address those concerns.
The Activision deal was blocked a week after the UK government plans to overhaul its competition framework, including a new digital markets unit.
The latter would effectively see the CMA play an ongoing regulatory role for big tech names. The latter can be thought of as backward behavioral solutions, a reduction in the underlying applicability of the former due to its nature. One way or another, GAFAM is going to see a lot of UK regulators.
There are legitimate questions here. “I don’t think any other regulator has such an unfettered level of discretion,” said an expert on the CMA’s freedom of action under the new bill.
The outcome of that debate will have far more impact on the UK than on Microsoft-Active’s position on the technology business.
helen.thomas@ft.com
@helentbiz
[ad_2]
Source link
