After UK regulators approved Microsoft's Activision deal in October 2023, Brad Smith rows back his criticism of the UK, saying the CMA had been “tough and fair”
Context & Ripple Effects
Microsoft’s position has shifted sharply from Brad Smith calling the CMA’s initial block a dark day for Microsoft in the UK. The regulator’s concern was not the established console market but competition in nascent cloud gaming.
The eventual approval followed a revised structure in which Microsoft agreed to sell certain gaming rights to Ubisoft. Smith’s new characterization therefore matters as an acknowledgement that the CMA’s intervention changed the transaction rather than simply delaying it.
First-order effects
- The CMA gains a public endorsement from Microsoft’s president after forcing changes to a deal it initially blocked.
- Microsoft can present the completed acquisition and its revised rights arrangement as a resolution to the UK’s cloud-gaming concerns rather than an unresolved regulatory confrontation.
Second-order effects
- Large technology buyers pursuing UK-sensitive transactions have a clearer signal that remedies addressing a regulator’s stated market concern can be more effective than challenging the regulator’s authority outright.
- Cloud-gaming rights become a more prominent bargaining lever in future games-industry reviews, because the CMA’s objections and the eventual remedy centered on that emerging segment.
Third-order effects
- If this pattern persists, the CMA’s post-Brexit influence will rest less on aligning with US or EU outcomes and more on its ability to extract transaction-specific changes in markets it considers strategically important.
- The case points toward merger review that treats control of future distribution channels—such as cloud access—as a structural issue before those markets are mature, though whether that approach becomes a broad standard depends on future cases.
The trend: The Activision review is part of a shift toward using merger remedies to shape competition in emerging digital distribution markets before they consolidate.