CMA blasts Microsoft as it approves revised deal

The competition watchdog blasted Microsoft after finally approving its £60billion takeover of Call Of Duty maker Activision Blizzard – but only after concessions from the US tech giant.

The Competition and Markets Authority (CMA) yesterday gave the green light to the merger, having originally blocked it in April over concerns it could stifle the gaming market.

The initial decision to stop the deal going through was met with howls of fury from both companies with Microsoft president Brad Smith branding it the company’s ‘darkest day in our four decades in Britain’.

But the CMA stood its ground in the face of criticism in the UK and the US – forcing Microsoft and Activision to eventually amend the terms of the proposal. The deal was accepted by the CMA yesterday – paving the way for the takeover to go through.

But the approval came with a stern rebuke from the watchdog.

Chief executive Sarah Cardell said: ‘The CMA is resolute in its determination to prevent mergers that harm competition and deliver bad outcomes for consumers and businesses.

‘We take our decisions free from political influence and we won’t be swayed by corporate lobbying.

‘We delivered a clear message to Microsoft that the deal would be blocked unless they comprehensively addressed our concerns and stuck to our guns on that.’ She added: ‘Businesses and their advisers should be in no doubt that the tactics employed by Microsoft are no way to engage with the CMA.’

Microsoft, which owns the Xbox, agreed to buy Activision in January last year, giving it ownership of games including Call Of Duty and World Of Warcraft.

But the CMA blocked the takeover in April over concerns that it would give Microsoft too much power in the cloud gaming market, which allows players to stream games over the internet. Microsoft’s Smith claimed the move was ‘bad for Britain’ and declared ‘the English Channel has never seemed wider’ while Activision bosses said the UK was ‘clearly closed for business’.

And the UK watchdog became increasingly isolated after EU regulators waved through the deal in May. An attempt in the US by the Federal Trade Commission to block the deal on the grounds it would lessen competition was thrown out by the courts.

But the CMA stuck to its guns and a new deal was proposed in August which would see the rights to stream Activision games outside the European Economic Area (EEA) – made up of EU members and Iceland, Liechtenstein and Norway – sold to French games maker Ubisoft Entertainment.

Approving the new deal yesterday, Cardell said this compromise ‘made sure Microsoft can’t have a stranglehold over this important and rapidly developing market’.

Ben Barringer, equity research analyst at Quilter Cheviot, said the outcome was a ‘victory’ for the CMA but said the watchdog must be careful not to over-regulate the tech sector.

‘There are fears the UK is a bad place to do business,’ he said.

Nicky Stewart, the former head of tech at the Cabinet Office, said: ‘The CMA has forced Microsoft to make concessions in the UK that other regulators have not. This is good news for the UK’s nascent gaming industry.’

A Microsoft spokesman said: ‘We have now crossed the final regulatory hurdle to close this acquisition, which we believe will benefit players and the gaming industry.’

This post first appeared on Dailymail.co.uk