Microsoft strikes again in the UK after blocking the acquisition of Activision

LONDON (Reuters) – Microsoft (MSFT.O) chief Brad Smith said the UK regulator’s decision to block its takeover of Call of Duty maker Activision Blizzard had “shaken confidence” in Britain as a destination for technology companies.

The Competition and Markets Authority (CMA), which operates independently of the government, blocked the deal on Wednesday, saying it could hit competition in the emerging cloud gaming market.

Microsoft hit back on Thursday, saying it was “probably the darkest day in four decades for Britain” and sent the wrong message to the global tech industry about the UK.

“If the UK government wants to bring in investment, if it wants to create jobs (…) it has to look seriously at the role of the Capital Markets Authority, the regulatory structure in the UK, this deal, the message that the UK just told the world.”

A spokesman for British Prime Minister Rishi Sunak said Smith’s comments were “not supported by the facts”.

“We continue to believe that the UK has a very attractive technology sector and a growing gaming market,” he said. “We will continue to proactively engage with Microsoft and other companies.”

Smith said Microsoft worked effectively with regulators in Brussels but not in London, which he said refuted Britain’s claim that it would be more flexible post-Brexit.

He said that the company answered the questions of the Capital Markets Authority, and asked them to return with any other concerns. “They were silent, and we did not hear anything from them,” he said.

“There is a clear message here – the EU is a much more attractive place to start a business if you one day want to sell than the UK,” he added.

But Sarah Cardell, chief executive of the Capital Markets Authority, said the regulator’s role was to ensure Britain was a competitive environment for companies so they could grow and thrive.

“The decision taken by the Capital Market Authority is an independent one that we reached to consider a comprehensive assessment of the impact of the deal on competition, and we believe that this is the right decision for the UK,” she said.

She noted that the US Federal Trade Commission is also pushing to block the deal on the grounds of competition.

Yesterday, Microsoft said it would resume, with “strong” support from Activision (ATVI.O).

Appeals against CMA rulings are heard by the Competition Appeals Court, which issues a ruling on the merits of the decision. It won’t be an opportunity for Microsoft to introduce new remedies.

(Reporting by Muviga M and Paul Sandel); Editing by Sarah Young

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