Chancellor Jeremy Hunt wants the UK to be «the next Silicon Valley». Photo: Zara Farrar/HM Treasury
On Wednesday afternoon, Rishi Sunak hosted some 100 video game companies at No. 10 in what Downing Street called «a celebration of the success of the British video game sector.»
The Prime Minister told attendees that the UK gaming industry is gaining momentum and is promoting a host of tax incentives and investment funds.
But Sunak's message was thrown off course by a decision on the other side of London, at the headquarters of British merger regulator Canary Wharf.
At noon, the Competition and Markets Authority announced that it had decided to block Microsoft's takeover of Activision Blizzard for $68.7bn (£60.8bn). publication of the giant Call of Duty, one of the most popular video games in the world.
The regulator said the deal — the largest in the history of the video game industry — threatens to «crush competition» in the fast-growing cloud gaming market, making market leader Microsoft even stronger.
Microsoft President Brad Smith said the company will appeal the «wrong» decision , which, he says, «impedes technological innovation and investment in the United Kingdom.»
If Smith, the lawyer-statesman, is restrained in his criticism, Activision and its outspoken CEO Bobby Kotick were anything but. .
Questions and Answers What is the CMA and why did it intervene?
An Activision spokesperson said the CMA report was «a disservice to UK citizens facing an increasingly dire economic outlook», adding that «the UK is clearly closed for business».
Kotick, in a message to staff, said: «If the CMA decision stands, it will stifle investment, competition and job creation across the entire UK gaming industry.» competition observer.
The American software giant has spent much of the past decade as a vocal proponent of technology regulation, once funding campaigns against Google and supporting privacy laws such as the European GDPR.
Now that Microsoft has been targeted by regulators, it it would be easy to blame the company for sour grapes.
The CMA countered that “effective competition…. is critical to the economy as a whole” and that “merger control … plays a critical role in boosting productivity and growth in the UK”. It states that regulators review about 750 deals a year and only about a dozen conduct in-depth investigations.
Deliveroo boss Will Shu said he felt like he was «treated like a criminal.» during the CMA's investigation of Amazon's investment in the app. Photo: Aurelien Morissard/IP3/Getty Images
But this is hardly the first time that the regulator, which gained new merger powers after Brexit and should become more powerful thanks to a new competition provision, has been accused of abuse of power.
This week, chief executive Will Shue of takeaway app Deliveroo said he was «treated like a criminal» during an 18-month CMA investigation into Amazon's $500 million investment in the app. The investigation that ultimately ended the deal was «a complete bull,» he said on the Business Research podcast. dollars, saying it would increase his social media dominance. The Competitive Enterprise Institute said that blocking the «small beer» deal «is tantamount to an assertion by the CMA that it intends to act as the world's M&A policeman.»
The regulator has also scrutinized Nvidia's $40 billion acquisition of Arm, Britain's largest microchip company. The deal was canceled before a final decision was made, but then-CEO Simon Segars Arma warned that blocking it would hurt the investment. Weeks after the deal fell through, Arm unveiled plans to cut hundreds of jobs.
«It appears that the CMA intends to hit the UK's international reputation as a place for innovation with a sledgehammer by thwarting our government.» “We aim to make us a tech superpower,” said the Adam Smith Institute think tank, a regular CMA critic.
Britain is “closed for business,” businesses say
Investing in technology in the UK is a sensitive issue. Jeremy Hunt, the chancellor, has outlined plans to turn the UK into a «new Silicon Valley», but recent months have dealt a number of blows to those ambitions.
Arm, which is seeking a multibillion-dollar listing, rejected Sunak's offer and announced plans to list in New York instead of London. Instagram told employees last week that it was effectively shutting down most of its UK operations, with chief executive Adam Mosseri returning to the US. Other tech giants that have been expanding in London for a decade are now cutting office space.
Kotick, who was furious at yesterday's decision, said the UK could be the beneficiary of plans to hire up to 5,000 employees, but blocking the sale of it to Microsoft means «they [the UK] will not be Silicon Valley, they will be Death Valley.»< /p>
Other rules also threaten to stimulate conscious businesses that might otherwise thrive in the UK. Encrypted messaging services such as Whatsapp have been heavily criticized by an internet security bill that they claim would give the government access to users. messaging on a whim.
Whatsapp said it could shut down in the UK if forced to crack its encryption.
This week, the government unveiled plans to expand the powers of the CMA. The Digital Markets Unit at the regulator has been given the power to fine tech giants billions of dollars for violating rules set by the regulator.
If it exercises that power, criticism of the regulator is likely to grow louder.< /p>
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