ALEX BRUMMER: Big tech games the system

Big Tech has lived a charmed life for too long.

The biggest players act like the American buccaneers of the 19th and early 20th centuries who dominated oil, steel and banking before Teddy Roosevelt and the trustbusters started their work.

In many jurisdictions, including the UK, contemporary Silicon Valley equivalents are also seeking to minimize corporate taxes. There should be a ‘beware’ sign on everything they do.

Microsoft chief Brad Smith’s response to Britain’s Competition and Markets Authority (CMA) blocking the £54bn acquisition of gaming giant Activision Blizzard was to declare it was ‘bad for Britain’.

He displayed a contempt that stemmed from the arrogance of a £2 trillion behemoth accustomed to getting his own way.

The decision by a San Francisco judge to overturn a decision by the US Federal Trade Commission, the monopoly regulatory body, to block the Activision deal caused the CMA to stand in the way of the deal.

In the wake of the California decision, CMA CEO Sarah Cardell agreed to listen to proposals from Microsoft that could open the way to the transaction.

It is no coincidence that the court ruling came from San Francisco, the spiritual cradle of high tech, despite reservations about Big Tech in the Biden White House.

Silicon Valley’s biggest beasts are so used to trampling on governance standards that they never take no for an answer.

Meta’s decision to usurp Elon Musk’s ownership of Twitter by launching Threads has made Mark Zuckerberg a temporary hero.

We can’t forget the effort it took the Facebook founder to clean up his own social media sites, and his greatness in acquiring 91 rival tech companies, including £12.5bn Whatsapp.

Microsoft has made all sorts of promises about open cloud access to Activision games. Companies that manage platforms can also set rates.

As for the dynamic gaming industry in the UK, Microsoft’s presence as a dominant player can be a barrier to entry into markets and hamper creativity. Tech leaders are looking for ways to get around competitive regulators.

Nvidia was rightly blocked from acquiring Cambridge-based Arm Holdings – the UK company’s open-market licensing model for products would have been compromised.

It is now being reported that Nvidia, as a $1 trillion (£775 billion) company, may have found a way to control Arm as a cornerstone shareholder when the chip designer is brought to Wall Street by owner SoftBank.

The only difference seems to be the price, with SoftBank reportedly wanting a valuation of £62bn. Attempts to circumvent antitrust rulings using backdoors should be prohibited.

Hopefully, authorities in Washington and London will remain firm when it comes to Microsoft-Activision Blizzard.

But don’t count on it.

Star

Andrew Bailey eat your heart out! Jay Powell, the counterpart of the Bank of England at the US Federal Reserve, is winning the inflation battle.

The most recent US consumer price index (CPI) shows that the cost of living fell to 3 percent year-on-year in June and is a third from where it was in June 2022.

Core inflation, excluding energy and food prices, fell from 5.3 percent in May to 4.8 percent in June.

The risk of higher wage agreements and goods and services prices becoming embedded is diminishing.

Powell is reaping a reward for acknowledging before the Bank of England that the post-Covid war and Ukraine war price rises were anything but temporary.

The CPI remains above the Fed’s 2 percent target and market guesses suggest that a further rise in the Fed funds’ key interest rate by a quarter of a percentage point from the current 5 percent to 5.25 percent range is still likely is.

The golden scenario of a soft landing – no recession – seems eminently possible.

Scottish fog

Jeremy Hunt’s ambition to unleash pension fund investment in Britain’s cutting-edge technology doesn’t seem to have caught on in Edinburgh.

Baillie Gifford, the asset manager behind the Scottish Mortgage Investment Trust (which I own), is said to have closed its British Small Companies fund after trailing returns and redemptions.

It was hit hard by a share suspension and audit issues at internet-of-things pioneer Wandisco.

Instead, Baillie Gifford plans to focus on global smaller companies.

Not quite what the Chancellor ordered.