Microsoft and Activision Blizzard Refuse to Accept Defeat

The UK Competition and Markets Authority shocked the industry by blocking Microsoft's acquisition of Activision Blizzard, citing concerns over competition in the cloud gaming market. While some were surprised by the decision, others saw it coming. The real story, however, is how Microsoft and Activision Blizzard responded to the setback. Microsoft released a statement expressing disappointment and promising to appeal, while Activision Blizzard took a more aggressive tone, threatening to reassess its growth plans in the UK and warning that the decision would discourage innovation and investment. Both companies are using the "good monopolist, bad monopolist" routine, with Microsoft taking a more subtle approach and Activision Blizzard being more overt in its threats. The UK government has been accused of being anti-business and anti-tech, but the reality is that the CMA's decision is only against the merger, which may not have had much upside for competing tech businesses anyway. Meanwhile, Microsoft and Activision Blizzard are taking advantage of tax havens, with Activision Blizzard reporting a pre-tax loss of $441 million in 2021 despite making a profit of $564 million overall. The company has set up a complex web of subsidiaries to transfer profits to lower-tax countries, and has even received a tax credit of $5.3 million. Microsoft is also using tax havens, with its UK subsidiary reporting a net loss of £12 million despite the company making a net income of £16.7 billion. The IRS has accused Microsoft of attributing $39 billion in US profits to its Puerto Rico subsidiary as part of a tax avoidance scheme. The case highlights the power of large companies to influence regulations and avoid paying taxes, raising questions about the effectiveness of regulatory agencies and the impact on smaller businesses and consumers.