Corporations don’t become £2 billion giants by accident.
What Microsoft wants, Microsoft gets. The assumption is that the tech giant’s back-channel deal with Sony, the main opponents of its proposed £54bn takeover of gaming group Activision Blizzard, will clear a path through antitrust objections.
Microsoft has agreed that if its pursuit of Activision is successful, it will license its flagship game Call Of Duty to console maker PlayStation Sony for another decade.
The reckoning is that the comfortable deal with Sony will clear the way for the US Federal Trade Commission and Britain’s Competition and Markets Authority (CMA) to subdue their objections.
The FTC has already been struck down by a federal judge in San Francisco over its decision to block the Activision acquisition.
Peace offer: Microsoft has agreed that if its pursuit of Activision is successful, it will license its flagship game ‘Call of Duty’ to console maker PlayStation Sony for another decade.
He seeks to appeal the court ruling. The CMA was the first of the big competition regulators to block the deal, but has since sued for peace.
Sony had good reason to fear Microsoft’s control of Activision, as Call Of Duty directly generates £1.2bn of revenue each year.
Revenue would be many times higher if the value of subscription services and other add-ons were included.
FTC chair Lina Khan and Britain’s CMA chief executive Sarah Cardell initially received high praise for their willingness to stand up to Microsoft’s might.
But after the US federal court ruling, Khan, who had the backing of the Biden administration, has been left with the wind.
Cardell, who rejected claims by Microsoft’s Brad Smith that the CMA decision was bad for Britain, agreed to compromise with Microsoft.
No regulator or politician really wants to be on the wrong side of Microsoft, which is responsible for jobs and heavy technology investment on both sides of the Atlantic.
There are bigger issues at stake in this tug of war. The idea of two major game console producers sharing access to the biggest game creator is anti-competitive.
Open access should mean exactly that, and allowing Microsoft to set the terms and access to game licenses is absurd. Effectively, it means the bigger beasts could block other future console makers and stifle innovation in the AI age.
Paradoxically, the European Commission, after approving the Activision deal, is now going after Microsoft for unfairly directing users of its Office software to its Teams video conferencing app.
The decision to go after the company follows complaints from another video provider, Slack (now owned by Salesforce). Presumably it would also work against the interests of Zoom, Face Time, Skype et al.
Allowing Big Tech to enable its systems to trample potential rivals is a distortion of free markets. Regulators should be alert to Microsoft’s potential for mischief.
The short-termism of UK boards knows no bounds. The website of £8 billion British asset manager Gresham House boasts a history dating back to 1857.
Under the current leadership team, which bought the company nine years ago, Gresham has thrived by focusing on alternative technologies such as renewable energy and battery storage.
These are precisely the sort of assets Chancellor Jeremy Hunt wants to encourage as Britain becomes a tech hub, and they would fit nicely with Labour’s Green New Deal.
Instead, in their wisdom, Chairman Anthony Townsend and CEO Tony Dalwood have chosen to throw in the towel and sell to US private equity firm Searchlight Capital Partners for £437m. Aviva Investors is rightly unhappy.
London loses another stock listing, executives fill their boots and a green tech investor sells his soul.
fixing the odds
Readers of Rory Smith’s Expected Goals for 2022 book will recognize the value of high-tech sports analytics. He explains how football clubs like Brighton & Hove Albion came from nowhere to overcome their weight in the Premier League.
Sports analytics are very valuable to the gaming industry. So it makes sense for betting group Entain to spend big on US analysis firm Angstrom Sports for £122m. It is looking to tap into the US market through its BetMGM joint venture.
The intelligence collected will be particularly valuable in the stakes and parlay betting market (where risk is spread by placing two separate bets). All good for Entain, but, one suspects, less to the bettor’s advantage.
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