When the UK’s competition regulator blocked Microsoft’s merger with Activision last month, some in the industry were not surprised. But what did raise an eyebrow was the tech giant’s heavy-handed response.
“This decision, I have to say, is probably the darkest day in our four decades in Britain,” Microsoft president Brad Smith blasted in an interview with the BBC. “It does more than shake our confidence in the future of the opportunity to grow a technology business in Britain than we’ve ever confronted before.”
But did Microsoft really speak for the UK’s tech industry when it issued this invective? Or was this flashpoint with the regulator just a storm in a teacup?
For one thing, the Competition and Markets Authority has always been eager to reject mergers it considers harmful to consumers. A cursory analysis of CMA data shows that for most of the past 20 years, only around 50-60% of its phase 1 competition decisions are granted unconditional clearance.
For another, last year the UK’s tech businesses — of which the vast majority are based in London — surpassed a combined $1 trillion in value for the first time, making it only the third country on the planet to achieve this milestone. Clearly we’re doing something right.
Being a founder is cooler in Silicon Valley. And it should be the coolest thing to do in London.
But Microsoft isn’t the only firm to warn the tide is turning. Last month, the CEO of fintech giant Revolut, which has been waiting for two years to secure a banking licence, said he wouldn’t consider a listing in London because it “is not the business environment to operate in the modern world”, while on Wednesday, the founder of fellow London fintech LendInvest said he had quit the capital to start his next venture in Los Angeles, citing “the endless distraction of Brexit, Boris and the Liz Truss debacle”.
Mustafa Suleyman co-founded artificial intelligence business DeepMind in London, which was bought by Google in 2014 in a deal reportedly worth $500 million. The 38-year-old entrepreneur told the Standard the capital risked losing its flair because its creatives are struggling to get the funds they need to survive.
“I think the truth is London’s lost its confidence. It’s not what it was in the 2000s. And it needs to find back its passion for risk-taking, innovation, and invention.
“Being a founder is cooler in Silicon Valley. And it should be the coolest thing to do in London. [But] it’s just become expensive and inaccessible to artists and creatives and entrepreneurs and risk-takers.
“It should be a city of invention because the universities are amazing — we have some of the best in the world. What it needs is a culture of investment and risk-taking that is willing to take risks on those kinds of things and bet on them.”
But Paul Taylor, founder of $2 billion London-based fintech Thought Machine, said concerns about access to investment in London were overblown.
“London is still the best place for fintech in the world and in Europe,” he told the Standard. “That [there is less funding] is absolutely true but that is not a UK problem. There was a lot of easy money two years ago, people were throwing it at companies. A bunch of them got very lucky with funding rounds and both they and investors will learn a valuable lesson from that.”
Taylor instead pointed to the behaviour of the UK’s financial regulators, the PRA and the FCA, as being at the forefront of entrepreneurs’ minds when it came to concerns over London.
“There’s a deep frustration. When the challenger banks got started, the view was the UK regulators were very encouraging of new entrants to the market and challenger banks, which is why Monzo and Revolut got a very clear path to their initial licences, to such an extent that some of the incumbents felt it was unfair.
“But now it certainly has changed. There’s not this pro-technology company view of the regulators and they have become more bureaucratic and cautious… they’re just too slow and it takes months if not years to get answers to questions.
“People are a bit fed up. It’s not a disaster, it’s not the end of the world, but if would be good if we got a bit more encouragement. Doing what we do isn’t easy.”
