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The UK’s decision to block the Microsoft / Activision merger is courageous and right
Civil society statement supporting the move
The United Kingdom’s Competition and Markets Authority’s decision this week to block a proposed merger between Microsoft and the entertainment and gaming company Activision Blizzard is a welcome and courageous step in the face of furious lobbying and opposition from the two U.S. giants.
This move by the CMA has immense global significance, and marks the latest step in a remarkable new shift that recently begun, in how the world’s regulators are starting to tackle the dangerous power and dominance of digital tech giants.
The UK, still significant after Brexit
It is highly significant that a smallish country (the UK) which now, post-Brexit, no longer has the power and heft of the European Union behind it, absolutely does have the power to block a global merger between two giant U.S. corporations. Even if other regulators investigating the deal - including the EU and the U.S. – fail to block it, it is unlikely to proceed without UK approval.
For those worried about tackling concentrated economic power in the form of big technology firms, this is a powerful and hopeful signal that change is possible.
Moreover, the United Kingdom has in recent years shown a willingness to take a leading global role in tackling the monopolising power of digital giants. Until 2021, the Big Five western technology firms – Amazon, Facebook/Meta, Google, Apple and Microsoft – had acquired over 1,000 firms and yet no regulator, anywhere in the world, had blocked or unwound them.
The first move by any regulator worldwide to do so was the UK’s Competition and Markets Authority (CMA) which in 2021 unwound Meta’s completed acquisition of Giphy. This was not just a merger being blocked: this was technically a breakup. (Surprisingly, given the global precedent, it received little media attention in the UK at the time.)
Monopolists threatening the UK
Not only do these statements offensively conflate the interests of two American companies with those of the UK tech sector and the UK economy more broadly, but they are wrong about the impact on business, too. Preventing Microsoft from gaining a stranglehold over the nascent cloud gaming sector will help UK tech entrepreneurs and startups, not harm them.
This threatening language from the giant firms is exactly the kind of tactic we have seen again and again, be it from big global banks, big pharma, crypto firms, and anyone else lobbying for financial deregulation, weak enforcement of laws, tax cuts or loopholes. The basic message is: let us abuse and exploit your citizens or we will run away to countries that will let us exploit theirs.
Talk is cheap, and firms that make such threats rarely follow up on these threats by actively relocating significant business activity away from jurisdictions that try to regulate and control them.
When companies decide where to invest, survey after survey show that what they are looking for above all are healthy and educated workforces, high-quality infrastructure, the rule of law, political stability, and access to well-run markets. Excessive concentrations of corporate power threaten all these good things.
The CMA has been acting clearly in defence of UK citizens, businesses and consumers against rising abuses of power by dominant firms, and in preventing this monopolising merger it has done Britain a great service.
Mergers reduce innovation and harm workers and consumers
Research also shows that mergers generally reduce innovation, harm workers and jobs, raise consumer prices, and damage small and medium enterprises. This would have been no exception. Monopoly and monopolisation is anti-business and anti-tech, and as a result of the CMA’s decision Britain will enjoy a more resilient and prosperous economy, with better growth and employment prospects.
The Microsoft/Activision merger also comes hot on the heels of a new Digital Markets, Competition and Consumer Bill, another powerful and welcome signal that the UK is going to take a robust and brave stance towards corporate power. On this bill, Tom Smith, a well known UK competition expert, said:
"the CMA’s original Digital Markets Taskforce report of December 2020 has been implemented in almost its entirety."
Or, as Politico put it, “Britain says no to Big Tech as competition bill lobbying falls flat.”
It appears that the tech lobbyists who have furiously been trying to water this down have, in the meantime, got almost nowhere, which is more good news.
But with the Bill only at the start of its passage through Parliament, the battle is only beginning. The CMA needs our support in holding the line in the face of what are likely to be relentless attacks on its independents by big tech and other firms.
Cori Crider of Foxglove said:
“It’s great to see the CMA putting its money where its mouth is. Huge companies like Microsoft always try to get away with giant mergers by promising not to abuse their vast market power, but these promises don’t hold water and are impossible to enforce. We are pleased that the CMA saw through these excuses. We need to break the iron grip of Big Tech over our economy and society – but what will reduce the market power of companies like Google and Apple is better antitrust enforcement, not letting Microsoft get bigger. We look forward to seeing this approach replicated in other deals before the CMA, like Amazon - iRobot.”
Nicholas Shaxson of the Balanced Economy Project said:
A merger between these two firms would further consolidate the power of Microsoft, one of the most dominant firms in the world today. The CMA has stood firm and acted to protect the citizens of the UK from excessive market power, and it deserves our wholehearted support.
Max von Thun of the Open Markets Institute (Europe) said:
After unwinding Meta’s acquisition of Giphy, the UK’s CMA has once again demonstrated its willingness to stand up to Big Tech’s attempts to buy out the competition. Allowing Microsoft to acquire Activision would not only bolster its position in the console market, but more importantly – by combining Activision’s enviable catalogue with Microsoft’s significant cloud and PC assets – risk giving it an unshakeable grip over the rapidly emerging cloud gaming sector. Open Markets urges other competition authorities scrutinising this deal, in particular the European Commission, to take the CMA’s lead and block it outright.”
Update: excellent follow-up articles on the topic:
Helen Thomas in the Financial Times: “The tech tantrum appears to have provoked little angst — politically or otherwise. . . . the CMA has been increasingly robust in making its case that vibrant, vigorous competition is good for businesses, innovation, customers and the economy.”
Mehreen Khan in The Times: “Game on as UK steals a march on Brussels over Activision merger”