Microsoft and Activision Blizzard Refuse to Back Down

The UK's Competition and Markets Authority has shocked the industry by blocking Microsoft's acquisition of Activision Blizzard, citing concerns over the impact on cloud gaming competition. While Microsoft has expressed disappointment and vowed to appeal, Activision Blizzard has taken a more aggressive stance, threatening to reassess its growth plans in the UK. This reaction is consistent with the company's history of aggressive communication, including using memes to make its point. In contrast, Microsoft has generally maintained a more respectful tone, although its vice chair and president Brad Smith recently adopted a more aggressive tone in a BBC interview, suggesting that the UK's regulatory structure needs to be reexamined. Both companies have a history of using tax havens to minimize their tax liabilities, with Activision Blizzard reporting a pre-tax loss in the UK despite generating significant profits globally. Microsoft has also been accused of using complex subsidiaries to transfer profits to lower-tax jurisdictions. The UK government has introduced measures to attract tech businesses, including an upgraded tax break for game development, but the CMA's ruling suggests that regulators are taking a closer look at the impact of large tech mergers on competition. As the appeal process unfolds, it remains to be seen how the UK's regulatory environment will evolve and how companies like Microsoft and Activision Blizzard will respond to the changing landscape.