One of Microsoft's senior leaders has hit out after the software giant's deal to buy US video game company Activision Blizzard was blocked by UK regulators.

The move was "bad for Britain" and showed that the European Union was a better place to set up a firm than the UK, Brad Smith told the BBC.

But the Competition and Markets Authority (CMA) said its job was not to serve the interests of merging firms.

The CMA added that its decision would encourage growth.

The proposed $68.7bn (£55bn) takeover would see Microsoft get hold of massively popular games titles such as Call of Duty, Candy Crush, and World of Warcraft.

But on Wednesday the regulator said it was concerned the deal would hit innovation and give gamers less choice in the fast-growing cloud gaming market, where people buy subscriptions to access games online.

Microsoft has already said the decision may have an impact on its UK investment.

In an interview with the BBC Radio 4 Today programme, Mr Smith, who is Microsoft's vice chair and president, said the company was "very disappointed" about the CMA's decision, "but more than that, unfortunately, I think it's bad for Britain."

"There's a clear message here - the European Union is a more attractive place to start a business than the United Kingdom."

The UK government has made it one of its post-Brexit goals to bring in a "light-touch" set of rules for science and technology to encourage economic growth.

Mr Smith said that if the UK wants to bring in investment and make Britain a place "where technology is not only going to flourish, but be created", then "it needs to look hard at the role of the CMA and the regulatory structure".

He added that "people are shocked, people are disappointed, and people's confidence in technology in the UK has been severely shaken" by the CMA decision.

UK interests

However, the regulator hit back, saying: "It is the CMA's job to do what is best for the people, businesses and economy of the UK, not merging firms with commercial interests."

It added that its decision means that a range of firms, "large and small", can "continue to compete in this rapidly growing market".

This will mean more innovation, and more choice for consumers, it said.

"Those are the best conditions to attract investment and support growth," the regulator added.

Microsoft and Activision have said they would appeal the CMA's decision.

For the deal to work, it has to be approved by regulators in the UK, the US and the EU.

But it has fallen at the first hurdle. The CMA's decision may scupper the whole takeover.

Cloud gaming

This deal is important for Microsoft because it wants to make its position in the fast-growing cloud gaming market stronger.

Rather than buying games consoles, then games to play on them, cloud gaming means fans can stream titles via the internet rather than owning physical copies.

Microsoft has already invested a lot in this space, as it sees the future of gaming as people playing on their phones, consoles, internet TVs and other devices.

The deal would also give it some very popular games titles to be able to compete more with the likes of Sony, which has consistently opposed it.

Sony's position is that its PlayStation would have restricted access to some of the world's most popular titles, which would be bad for gamers.

Source:
courtesy of BBC NEWS

by Tom Espiner & Will Harris | Business reporters, BBC News

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