CMA Chief Defends Activision Decision Before Parliament

The chief executive of the UK’s Competition and Markets Authority (CMA) appeared before a Parliamentary panel on Tuesday to defend the agency’s decision to block Microsoft’s proposed $69 billion (£55bn) takeover of Activision Blizzard, telling lawmakers the CMA works with tech companies and is not seeking to foster a “hostile environment” for them.

Her appearance came a day after the European Commission approved the deal, saying Microsoft’s proposed remedies had allayed its competition concerns.

The regulator’s Sarah Cardell noted that the EU had agreed with the CMA that there were concerns about competition ion the cloud gaming market – the principal reason why the agency blocked the deal.

The two bodies diverged in their response to those concerns, she said, saying the CMA had considered Microsoft’s proposed remedies “very carefully”.

Regulatory divergence

Microsoft agreed to allow users in Europe to stream games from any cloud provider for a period of ten years.

But Cardell said this would subject the nascent cloud gaming market to ongoing regulation, by contrast to the relatively free competition that exists now.

The CMA wanted to ensure the emerging cloud gaming market was able to develop unencumbered by regulatory constraints, she said.

“We remain of the view, from a UK perspective, that it was not appropriate to accept that remedy,” she said, adding that the US FTC is also suing to block the deal.

Cloud competition

Microsoft already holds a leading position in the cloud market, due to its Azure cloud infrastructure, Xbox gaming console and Windows operating system, and the CMA concluded that that position combined with Activision Blizzard’s significant gaming portfolio would create an anti-competitive environment.

“There was a real concern on the part of the [CMA] group that if you accept the proposal that was tabled by Microsoft, it would constrain the way the market would evolve going forward,” she said.

“It would not replicate the conditions of full and fair competition that we would see in the absence of the merger.”

Asked whether the CMA considers the impact of the UK’s reputation as a place to do business when making its decisions, Cardell said making pro-competition decisions was “a very positive signal for the UK’s reputation externally”.

‘Hostile environment’

She said the CMA meets regularly with tech industry executives and wants to work together with them on solutions.

“I don’t find that we are operating in a hostile environment,” she said.

Following the CMA’s decision to block the merger last month Microsoft president Brad Smith accused the agency of making a decision that was “bad for Britain”.

Florian Mueller, a software industry intellectual property activist who has consulted for Microsoft and acted as a representative of Blizzard Entertainment, said on Twitter that rather than boosting competition the CMA decision “only benefits Sony, Google, and by extension Apple (with a view to app store competition)”.