Last year, Microsoft president Brad Smith expressed his dissatisfaction with the UK’s Competition and Markets Authority (CMA) after the regulator blocked Microsoft’s proposed $68.7 billion deal with Activision Blizzard. However, following a restructuring of the deal and subsequent approval by the CMA, Smith now has a different perspective. In an interview with BBC Radio 4’s Today program, he described the regulator as “tough and fair,” signaling a change of heart.
When the CMA initially blocked Microsoft’s deal in April of last year, Smith was highly critical and stated that confidence in the UK had been “severely shaken.” He even went as far as to say that “the European Union is a more attractive place to start a business” than the UK. These strong words reflected the gravity of the situation for Microsoft, as it was described as the “darkest day” in the company’s four decades of working in Britain.
Despite his initial criticisms of the CMA, Smith acknowledged that he had learned a lot from the experience. During his recent appearance on Radio 4, he admitted that he wouldn’t necessarily step back from all of his concerns, but he would choose different words to make his point. This shift in attitude demonstrates a level of personal growth and reflection on Smith’s part.
CMA’s Impact on the Deal
The CMA’s intervention forced Microsoft to restructure its Activision Blizzard deal, resulting in the company giving up key cloud gaming rights not only in the UK but also in several other markets worldwide. Smith acknowledged the CMA’s insistence on a tough standard and expressed his respect for the regulator’s approach. He stated that it pushed Microsoft to change its proposed acquisition to address the CMA’s concerns regarding cloud gaming.
Regulator’s Displeasure with Microsoft’s Tactics
While Smith has changed his tune, the CMA did not shy away from criticizing Microsoft’s tactics. CMA CEO Sarah Cardell cautioned that the tactics employed by Microsoft were not the right way to engage with the regulator. She further stated that Microsoft had the opportunity to restructure the deal during the initial investigation but instead continued to insist on measures that the CMA deemed ineffective. Cardell condemned Microsoft’s actions, citing time and money wasted due to the drawn-out proceedings.
The Deal’s Closure and Ongoing Legal Proceedings
Thanks to Microsoft’s concessions to the CMA, the deal eventually concluded in October after months of regulatory scrutiny around the world. However, the saga is not over yet, with the Federal Trade Commission (FTC) still pursuing its case against Microsoft’s deal in the US. The Ninth Circuit Court of Appeals is expected to make a decision on an appeal over the FTC v. Microsoft case soon. Additionally, the FTC is preparing to proceed with a separate administrative case unless it decides to abandon its pursuit altogether.
Microsoft president Brad Smith’s change of heart regarding the UK’s Competition and Markets Authority highlights the complexities and challenges involved in large-scale deals. The restructuring of the Activision Blizzard deal and the subsequent approval by the CMA demonstrate the regulator’s commitment to its role. However, the criticism directed at Microsoft’s tactics emphasizes the importance of engaging with regulators in a constructive and cooperative manner. As legal proceedings continue in the US, the future of the deal remains uncertain.
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