Microsoft boss Brad Smith’s attack on the UK’s independent competition authority and a perceived lack of openness in our economy is offensive and false.
It says more about how the tech giant thinks it can force governments around the world into submission than anything else.
The $2 trillion (£1.6 trillion) Seattle giant, like much of Silicon Valley, is used to throwing its weight around the United States and evading regulators through lobbying and financial power. It clearly believes it is possible to do the same in Britain.
The whole aim of the wholly independent Competition and Markets Authority (CMA), which is blocking the £56bn takeover of ‘Call of Duty’ gaming champion Activision, is to take such decisions out of the political arena.
Thwarted: Microsoft Vice Chairman Brad Smith has reacted angrily to the competition and market authority’s decision to block the acquisition of video game maker Activision
To suggest, as Smith has made, that there is a lack of oversight when competition regulators are often called upon to appear before parliamentary panels shows ignorance of how Britain works.
If Microsoft won the battle over Activision, it would gain control of 70 percent of the global gaming cloud computing market.
That would not only deprive users of other platforms, such as Apple and Samsung, of choice, but also allow Microsoft to dictate the price of such services. It would also be a blow to the UK gaming sector.
This is largely an all-American deal. But in a world where there is valuable British technology and creativity, acquisitions act like a giant vacuum cleaner, sucking up the best creators of games, intellectual property, copyright and patents.
Innovation centers ranging from Dundee to Sheffield could be affected. Smith seemed confident that he would get a better hearing from the European regulator, who has dealt directly with the deal, but he lives in cuckoo land.
Brussels is ready to enter where the US authorities dare not.
It acquired Apple for its tax arrangements in Ireland and is responsible for enforcing the GDPR privacy rules.
The EU has shown more determination to tackle technology tax avoidance than the UK.
Smith’s most outrageous claim is that the EU is somehow a better place to do business post-Brexit than the UK. Britain is still Europe’s strongest market for inward investment, particularly in science, artificial intelligence and technology.
Moreover, while it is almost impossible for foreign companies to make acquisitions in Europe, the UK is still wide open.
Over the past year, some of our most valued pioneering companies, including the £4bn communications satellite pioneer Inmarsat, the £10bn industrial software group Aveva and the submarine sonar detection defense company Ultra Electronics, have been gobbled up by international rivals without the involvement of the CMA. .
What Smith and his Activision counterpart Bobby Kotick failed to say when they launched their attacks on Britain’s high standards of governance is that both companies, and the individuals who run them, have very strong interests at stake.
If Microsoft fails to close the Activision deal, the company will not only miss out on another valuable stream of business, but will also have to write a $3bn (£2.4bn) check to Activision for failure – the break clause in the agreement. agreement.
As for Kotick, he’s about to receive a $375 million (£300 million) payout if the offer is made.
The CMA’s strong ruling (which is subject to appeal) is seen as particularly important as it will inform other competition enforcers around the world.
CMA boss Sarah Cardell’s claims that it would harm gamers, video game players and stifle innovation look remarkably solid.
Microsoft’s best chance of enforcing the transaction is in the US, where big tech has had everything swept before it.
US antitrust regulators, the Justice Department and the Federal Trade Commission, have been hampered by successive governments, which have had big tech in their rhetorical crosshairs but are hesitant to address them.
Allowing Microsoft to dominate the burgeoning gaming space even if open access is promised would probably be going a bit too far even for the malleable US authorities.
Microsoft and Activision’s coordinated mistreatment of the CMA and Britain shows just how ruthless American companies can be when thwarted in their ambitions to dominate the cloud and cyberspace.
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