Following the UK’s CMA ruling against Microsofts acquisition of Activision Blizzard it hasn’t taken long for the heads of both sides of the deal to come out swinging against the decision.
The CMA halted the deal specifically citing concerns about the potential effects it may have on competition and choice in the cloud gaming market. Meanwhile the entire deal has faced criticism from numerous directions, including public sparring with Sony bosses over potential issues with the exclusivity of one of Activision’s biggest titles, Call of Duty.
First to the mic was president of Microsoft Brad Smith who, speaking to the BBC’s Wake up to Money programme said, “Unfortunately I think it’s bad for Britain…the strong message the CMA has sent is not just to surprise everyone who fully expected this acquisition to be approved, but to send a message that I think will discourage innovation and investment in the United Kingdom.
“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.”
Smith’s words were closly followed by comments from Activision Blizzard CEO Kottick who, when speaking to Bloomberg Television said, “Cloud gaming is an inconsequential part of the business,” before going on to say, “I think that Microsoft really went out on a limb to provide remedies that would ensure that anyone who had an aspiration to participate in cloud gaming would be able to do so.”
Backlash against the UK?
Smith’s terms were only slightly more harsh than Kotick’s statements regarding the CMA. It seems that the feeling is that this move has sent out the wrong message, that the UK is unfriendly to games, developers and studios. As noted in a BBC news article on the controversy however, the UK games industry has in fact doubled in size over the past. And while the Activision Blizzard deal is massive, they’re far from the first regulatory to raise concerns and challenges to it, as the US regulatory committees have.
There will certainly be some people who take Kotick and Smith’s words at face value, worrying about the potential impact on the UK games industry. But there are some legitimate concerns about the regulator’s decision and some have criticised the CMA’s decision to halt the deal over what they view to be the relatively insignificant aspect of cloud gaming.
“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,” Smith added. “When we studied the decision, in part it’s based on what we feel is such a flawed or faulty understanding of the market… but this business [cloud gaming] is so small today that Microsoft can’t even stream games to more than 5000 people at a time in the entirety of the United Kingdom.”
This sentiment seems to be shared by Kotick, who argues that the companies involved in the acquisition had made a number of concessions around cloud gaming already with the intent of meeting the expectations of the CMA. It could therefore be argued that these concerns weren’t adequately explained on the CMA’s part, hence the widely spoken grievances by those involved in the acquisition.
Who’s to blame?
However, some believe the blame lies squarely with Microsoft for not adequately addressing these concerns in the first place. Senior games analyst at Enders Analysis, Gareth Sutcliffe, spoke to the BBC in the same article and said, “The signs were clear for months that this deal was in trouble with UK regulators and yet Microsoft executives didn’t prioritise it or heed the evidence that it was [in trouble].
“They had ample opportunity to do things differently over the past 16 months – they’ve not provided a convincing enough case.”