What you need to know
- The UK regulator, known as the CMA, blocked Activision-Blizzard's merger with Xbox.
- Activision is known for World of Warcraft, Candy Crush, and Call of Duty, and the deal has been protested by Sony, Google, among others.
- Despite protests from some of Microsoft's larger competitors, the vast majority of the gaming industry have been supportive of the deal, given that Microsoft wants to add its games to competing cloud services.
- Today, Florian Mueller who is a prominent patent lawyer following the case discovered that the UK regulator's senior director used to work for a firm that is actively representing Sony, potentially highlighting a conflict of interest, and a degradation of impartiality.
- Update: Mueller has since claimed that said senior director was a central voice in getting the ABK deal blocked.
A little while ago, the UK regulatory arm for competitions and mergers, known as the CMA, sensationally blocked Microsoft's merger between Xbox and Activision. With Xbox in distant third place in the console race, the merger would have helped Microsoft gain a stronger foothold to ensure its ability to compete long-term in an industry that is shifting increasingly towards mobile games and services, a landscape dominated by Apple, Google, alongside Chinese firms like Tencent. Stoking unfounded fears that Microsoft may block Call of Duty on PlayStation, despite offering contractual obligations to deliver it, Sony managed to call the acquisition into question in various key markets, most notably the UK.
The UK CMA is well-known for its incompetence and ignorance when it comes to technology deals, having previously been defeated by Apple and other firms for its overreaching claims. Many decisions by the CMA in the past have demonstrably harmed investment in the UK market, potentially reducing innovation and jobs in a region desperately in need of it. The CMA has endured criticism from the European Commission and the UK government itself in recent weeks for its strange, irrational choice to block Xbox's deal for Activision, over "fears" that it could harm the "cloud gaming market," which by most metrics, barely even exists. And now, another interesting piece of the "irrationality" pie may have been uncovered.
Patent lawyer Florian Meuller @FOSSPatents recently discovered that the CMA's current-serving senior director, Colin Raftery, previously worked for Cleary Gottlieb — a law firm that has been representing Sony in their regulatory protests to the deal.
LinkedIn profile shows: the #CMA's Senior Director, Mergers used to work from 2006 to 2013 for Cleary Gottlieb, the law firm that has been representing #Sony as a complainant over the #Microsoft-#ActivisionBlizzard internationally.He was a key decision maker on this.🧵2/3 pic.twitter.com/hh3L7eqOMfMay 25, 2023
Raftery is speaking at an event where figures are examining post-Brexit regulatory issues. Another speaker at the event reportedly represents legal firm RBB, which is also representing Sony and Google in leading complaints against Microsoft's acquisition.
Raftery hasn't worked for Cleary for some time, but it's not a stretch to think that there could be a conflict of interest here. If Raftery maintains personal relationships with old acquaintances and friends who stand to gain from the blocking of the ABK deal, that could heavily indicate partiality.
Update: Since our initial write-up, Florian Mueller who originally broke the story claims that a reporert from a "famous" news agency claimed that Raftery was a central figure in getting the deal blocked.
A reporter from one of the most famous news agencies told me this about him: "He’s the guy that basically made the decision for the CMA"I don't want to disclose the agency/reporter. Didn't know about that influence over the merger review.May 25, 2023
Raftery was also instrumental in blocking the merger between two major supermarket chains in the UK, ASDA and Sainsbury's. What few may know, however, is that Raftery had also served as a legal advisor to Tesco, the UK's biggest supermarket chain, who would of course have reservations about a such a merger. The CMA didn't consider this to represent a conflict of interest, although anyone of sound mind may think otherwise.
He was also involved in CMA's decision to block Sainsbury's merger with Asda, even tho he previously acted as a legal adviser to Tesco plc - their direct competitor. CMA didn't consider that a conflict of interests. pic.twitter.com/VclEom3xC7May 25, 2023
The UK is widely known to sport a culture of political back-scratching, particularly as pertains to borderline insider trading among the political class. The current ruling party has been repeatedly accused of using its position to offer friends, and friends of friends, lucrative share-booming contracts funded by taxpayers, particularly during the pandemic.
Even the possibility of foul play here emphasizes the need for more oversight of the CMA's regulatory operations. The decision to block Microsoft's deal on the basis that it is the "largest" cloud operator, on the basis that all Xbox Game Pass Ultimate subscribers may use cloud, is irrational in of itself. It also omits the fact Amazon Luna with Amazon Prime launched just a few days after the CMA filed its final decision. By the CMA's own logic, Amazon Luna now becomes the largest cloud gaming provider in the UK owing to Amazon Prime's estimated 13 million strong primary account holder membership numbers in the UK market.
