Microsoft ruling: what the experts say
Danni Hewson, head of financial analysis at AJ Bell, says:
“Investors will know that getting the thumbs up from EU regulators is still a very long way from Microsoft getting the global green light to go ahead with its deal to take over games developer Activision.
“The UK competitions watchdog has already held up a red card and in the US, regulators are heading to court after filing a lawsuit to block the deal.
“But the European Commission says it’s satisfied with the measures Microsoft has put in place. This feels slightly uncomfortable for the UK after comments from Microsoft president Brad Smith that Europe was a better place to start a business.
“Why the difference in stance, and will the CMA’s ruling hold up in court which is where this dispute is expected to end up?
There’s a huge amount of money on the table and a big question about what the future of gaming will look like.”
Alex Haffner, competition partner at law firm Fladgate, says there is clearly a lot to play for:
“The European Commission’s decision leaves clear blue water between it and the UK CMA in their assessment of whether competitive concerns as to the future of the cloud gaming market could properly be dealt with through (behavioural) commitments offered by the parties.
Whereas the Commission felt these commitments, essentially a form of open licensing allowing gamers to stream Activision games on the platform/device of their choice were “sufficiently comprehensive”, the CMA’s earlier decision described the same form of commitments as too static and unable to account for changes in the market over time.
Critics of the CMA’s stance, of which there have been many, will inevitably seize on today’s decision as proving the point made that the UK’s regulatory regime is too rigid and stifles innovation. Microsoft and Activision’s lawyers will also use the decision to provide greater ballast to their appeal of the CMA’s decision which is in the works.
What is now at stake, however, is not just any perceived differences in the UK and EU regulatory regimes, but more fundamentally whether the power wielded by big tech needs to be dealt with through structural rather than behavioural means. It is worth remembering also that the US Federal Trade Commission has yet to reach its final decision in connection with the same merger and many have suggested they too are gunning for Big Tech.
Professor Suzanne Rab, competition and EU law barrister at Serle Court chambers, predicts that Europe’s decision is unlikely to stop the CMA’s current hawkish enforcement stance in merger control which shows it is prepared to tread its own path.
“Whether the UK decision will scupper the whole deal remains to be seen as an appeal is understood to be underway. However, the parties and their advisers will no doubt be taking a long hard look at the global implications of different approaches of the merger authorities to a deal with global and complex impacts.”
CMA: We stand by our decision on MS-Activision deal
A late newsflash: the head of the Competition and Markets Authority says the UK watchdog stands by its decision to block the $69bn Microsoft-Activision deal, even though European regulators have ruled the other way today.
Sarah Cardell, chief executive of the CMA, says its experts considered, and rejected, MS’s remediation proposal:
“The UK, US and European competition authorities are unanimous that this merger would harm competition in cloud gaming. The CMA concluded that cloud gaming needs to continue as a free, competitive market to drive innovation and choice in this rapidly evolving sector.
“Microsoft’s proposals, accepted by the European Commission today, would allow Microsoft to set the terms and conditions for this market for the next ten years. They would replace a free, open and competitive market with one subject to ongoing regulation of the games Microsoft sells, the platforms to which it sells them, and the conditions of sale. This is one of the reasons the CMA’s independent panel group rejected Microsoft’s proposals and prevented this deal.
“While we recognise and respect that the European Commission is entitled to take a different view, the CMA stands by its decision.”
