Last year, the UK’s Competition and Markets Authority (CMA) blocked Microsoft’s huge deal with Activision Blizzard, something Microsoft chief Brad Smith wasn’t happy about. Now that Microsoft has restructured the deal and received approval in the UK, Smith had a kinder assessment of the CMA in an interview with BBC Radio 4’s Today programme, calling the regulator “tough but fair”.
Smith initially criticized the CMA and said confidence in the UK was “seriously shaken” after regulators moved to block Microsoft’s $68.7 billion deal last April. He called this the “darkest day” in Microsoft’s 40 years of working in the UK, and further stated that “the EU is a more attractive place to start a business than the UK.”
“I definitely learned a lot personally,” Smith admitted on Radio 4 yesterday. “I wouldn’t necessarily abandon all of the concerns that were raised when we spoke in April, but I might choose slightly different words to express my views.”
The CMA forced Microsoft to restructure its deal with Activision Blizzard, giving up key cloud gaming rights in the UK and many other markets around the world. “The CMA adheres to strict standards and I respect that. In my view, it’s tough but fair,” Smith added. “This prompted Microsoft to change our acquisition proposal for Activision Blizzard to divest certain rights in cloud gaming that the CMA was concerned about.”
Although Smith had a change of heart over his criticism of the CMA, the regulator was not happy with Microsoft’s strategy. Sarah Cardell, chief executive of the CMA, warned in October: “Businesses and their advisers should have no doubt that Microsoft has adopted a strategy that would make it impossible for the CMA to engage with it.” “During our initial investigation, there was an opportunity for Microsoft to restructure, but we did not Continuing to insist on a series of measures that we tell them simply won’t work. Prolonging the proceedings in this way will only waste time and money.”
Microsoft’s concession to the CMA allowed the deal to close in October after months of regulatory scrutiny around the world. The Federal Trade Commission is still prosecuting Microsoft’s U.S. deal and making decisions on appeals of the deal. Federal Trade Commission v. Microsoft The Ninth Circuit Court of Appeals is expected to hear the case soon. The FTC is also filing a separate administrative lawsuit against Microsoft over the deal, which will be launched shortly after the appeal is decided unless the FTC drops its case entirely.
