Microsoft’s president, Brad Smith, has shifted his stance from last year when he criticized the UK as “bad for business.”

The change in tone comes after the Competition and Markets Authority (CMA) initially blocked Microsoft’s proposed acquisition of gaming giant Activision Blizzard.

The regulator’s concerns centered around potential negative impacts on innovation and consumer choice in the burgeoning cloud gaming industry.

In a recent interview with the BBC’s Today Programme, Smith acknowledged the CMA’s role and described the regulatory body as “tough and fair.”

He credited the CMA for pushing Microsoft to modify its acquisition proposal, specifically requiring Activision Blizzard to spin out certain rights related to cloud gaming that raised concerns.

Initially, the CMA rejected Microsoft’s bid in April, causing a setback for the tech giant and suggesting that the European Union might be a more attractive business environment.

However, following a restructuring of the deal, the CMA granted approval in October. Smith expressed his belief that the CMA both upheld its position and paved the way for innovation and investment in the gaming industry, ultimately benefitting all parties involved.

Despite the approval, the head of the CMA, Sarah Cardell, criticized Microsoft for its conduct during the process, stating that the tactics employed by the company were not an appropriate way to engage with the regulatory body.

She emphasized that Microsoft had the opportunity to restructure during the initial investigation but chose to persist with measures that were deemed ineffective, leading to unnecessary time and resource wastage.

Microsoft’s plan to acquire Activision Blizzard, touted as the largest takeover in gaming industry history, faced scrutiny and mixed responses from regulators globally.

The restructured deal submitted in August 2023 included an agreement for Microsoft to transfer streaming rights of Activision games from the cloud to Ubisoft, a French video game publisher, for a period of 15 years.

This arrangement ensured that players on non-Microsoft consoles, such as Sony’s PlayStation, could still stream popular games like Call of Duty, over watch, and World of War craft.
In addition to discussing the gaming deal, Smith highlighted Microsoft’s commitment to invest £2.5 billion in AI infrastructure in the UK over the next three years.

He also commended the UK government for its proactive approach, citing the £900 million commitment to building out infrastructure for the country’s researchers. Smith attended the AI Safety Summit held in November, characterizing it as a “critical” initiative by the UK government.

Reflecting on the broader context, Smith pointed out that the UK government’s actions in 2023, particularly in the AI sector, positioned it boldly compared to other governments worldwide.

He emphasized that the end of the year was more crucial than isolated incidents, underscoring the importance of considering the overall trajectory rather than specific dates, such as the 26th of April when the original rejection occurred.

Overall, Microsoft’s evolving relationship with the UK, the regulatory process, and the strategic investments in AI infrastructure demonstrate the dynamic nature of business interactions in the technology sector.

Last Updated: 02 January 2024