Microsoft Criticizes the ‘Irrational’ Move to Oppose the £55 Billion Activision Acquisition
Microsoft has accused Britain’s competition authorities of “irrationally” delaying its £55 billion merger of Activision, the maker of the Call of Duty video game franchise.
Microsoft, the maker of the Xbox game console, accused the Competition and Markets Authority (CMA) of making “fundamental errors” in its appeal.
According to Microsoft’s submission with the Competition Appeal Tribunal, the CMA did not “properly account for three long term commercial agreements which [Microsoft] had entered into” with cloud gaming businesses. Microsoft has revealed a number of multi-decade arrangements with gaming businesses to safeguard their access to Call of Duty.
In April, the CMA barred Microsoft’s acquisition of Activision, alleging that it would hinder competition in the developing industry for streaming video games.
Following the judgement, Microsoft President Brad Smith slammed the regulator, claiming that the move sent a “clear message” that the EU was a more appealing place to start a business than the United Kingdom.
Meanwhile, Activision, which also produces the smartphone game Candy Crush, said that the UK was “closed for business.”
Since the merger was delayed by the CMA, European officials have given the deal the go-ahead. According to sources in Brussels, British concerns about the so-called cloud gaming business are unfounded, as it accounts for only a small portion of the video game industry.
Politicians have reacted negatively to authorities’ proposal to reject the deal. After the merger was vetoed, Chancellor Jeremy Hunt stated that regulators needed to “understand their broader responsibilities for economic growth.”
It comes amid concerns that tech firms are fleeing the UK, despite government efforts to create a new “Silicon Valley” in the country. Revolut, the fintech behemoth, has announced plans to go public in the United States after failing to obtain a UK banking licence, while chip designer Arm has bypassed the City to go public in New York.
“If we allow entrenched market power to grow,” he continued, “we all suffer.”
Microsoft claimed in a file with the tribunal that the CMA’s ruling was incorrect because it neglected to take into account a series of long-term promises made by the tech giant with rival console makers to maintain access to Call of Duty.
Sony, which makes the PlayStation, was opposed to Microsoft’s takeover of Activision because it feared it would shut off access to Call of Duty. Microsoft claimed that the CMA ignored evidence that it had no reason to prevent its competition and that its decision to prohibit the merger was “disproportionate.”
“We prohibited this deal because we were concerned that it would reduce innovation and choice in the UK cloud gaming market,” a CMA spokesman said. We will argue our case in court.”
