1 00:00:00,040 --> 00:00:02,560 Speaker 1: Well, let's get more details now on that story about 2 00:00:02,720 --> 00:00:06,519 Speaker 1: Microsoft submitting a new deal to the UK's competition regulator 3 00:00:06,559 --> 00:00:10,560 Speaker 1: for its active acquisition of Activision. The restructured deal, the 4 00:00:10,560 --> 00:00:12,639 Speaker 1: regulator says, is substantially different to the one that was 5 00:00:12,680 --> 00:00:16,520 Speaker 1: rejected last year. The software giant is eyeing Activision's large 6 00:00:16,560 --> 00:00:20,440 Speaker 1: catalog of hit titles as it seeks to expand into 7 00:00:20,480 --> 00:00:24,200 Speaker 1: mobile gaming. The sixty nine billion dollar offer announced last 8 00:00:24,280 --> 00:00:28,120 Speaker 1: year would make this the largest tech acquisition ever. Were 9 00:00:28,200 --> 00:00:31,120 Speaker 1: joined now to discuss by Sarah Cardell, the chief executive 10 00:00:31,160 --> 00:00:33,920 Speaker 1: of the Competition of Markets Authority. Sarah, good morning to you. 11 00:00:33,920 --> 00:00:36,440 Speaker 1: Thank you very much for being with us on Bloomberg Radio. 12 00:00:36,680 --> 00:00:39,800 Speaker 1: What's different about this new offer from Microsoft. 13 00:00:41,120 --> 00:00:44,080 Speaker 2: Yeah, so there are atually two developments that we're announcing today. 14 00:00:44,080 --> 00:00:47,000 Speaker 2: The first, importantly is that we have finalized the legal 15 00:00:47,120 --> 00:00:50,240 Speaker 2: order that confirms our for envision decision in relation to 16 00:00:50,280 --> 00:00:54,320 Speaker 2: the original Microsoft deal. And then, as you say, separately, 17 00:00:54,400 --> 00:00:58,600 Speaker 2: Microsoft have announced a new structured deal which is substantially 18 00:00:58,640 --> 00:01:01,440 Speaker 2: different from the deal that were previously on the table, 19 00:01:01,760 --> 00:01:05,280 Speaker 2: and the key difference is that this time Microsoft will 20 00:01:05,280 --> 00:01:08,480 Speaker 2: not be acquiring any of the cloud streaming rights in 21 00:01:08,520 --> 00:01:11,679 Speaker 2: relation to Activision Games for the next fifteen years. Now, 22 00:01:11,720 --> 00:01:15,080 Speaker 2: you might remember that the main reason why we blocked 23 00:01:15,120 --> 00:01:18,040 Speaker 2: the deal originally was because we were concerned about the 24 00:01:18,080 --> 00:01:21,880 Speaker 2: impact on competition this important new markets for cloud gaming. 25 00:01:22,680 --> 00:01:27,160 Speaker 2: Instead of Microsoft acquiring those rights and relations with cloud streaming, 26 00:01:27,400 --> 00:01:30,200 Speaker 2: those rights will separately be sold by Activision to an 27 00:01:30,200 --> 00:01:34,240 Speaker 2: independence gaming company, Ubisoft, So that creates quite a different 28 00:01:34,440 --> 00:01:37,280 Speaker 2: transaction for us to review. And today we're announcing the 29 00:01:37,360 --> 00:01:40,280 Speaker 2: start of a new investigation where we'll consider the impacts 30 00:01:40,280 --> 00:01:41,440 Speaker 2: of that deal on competition. 31 00:01:42,040 --> 00:01:44,399 Speaker 1: What will this deal need to prove to you for 32 00:01:44,480 --> 00:01:45,920 Speaker 1: you to be able to approve us. 33 00:01:46,120 --> 00:01:48,240 Speaker 2: So we have been clear all along that it is 34 00:01:48,320 --> 00:01:52,560 Speaker 2: absolutely critical to keep this new developing market for cloud 35 00:01:52,640 --> 00:01:57,400 Speaker 2: gaming open to effective competition, to support innovation, to support choice. 36 00:01:57,480 --> 00:02:00,640 Speaker 2: We had a real concern previously that Micro will be 37 00:02:00,640 --> 00:02:03,080 Speaker 2: able to control the way that that market was going 38 00:02:03,080 --> 00:02:05,280 Speaker 2: to develop. What we see with this new deal and 39 00:02:05,320 --> 00:02:07,960 Speaker 2: we will have to test it carefully through our review, 40 00:02:08,320 --> 00:02:11,520 Speaker 2: But what we see from the announcement today is that 41 00:02:11,639 --> 00:02:14,680 Speaker 2: rather than Microsoft being able to control how those cloud 42 00:02:14,680 --> 00:02:18,200 Speaker 2: streaming rights are used, that control will shift to an 43 00:02:18,200 --> 00:02:21,440 Speaker 2: independent company and Ubisoft will be able, for example, to 44 00:02:21,560 --> 00:02:24,400 Speaker 2: enter into all sorts of licensing deals with other cloud 45 00:02:24,400 --> 00:02:28,360 Speaker 2: streaming providers, supporting importantly different kinds of business models, for 46 00:02:28,400 --> 00:02:33,320 Speaker 2: example multi grain subscription services or enabling cloud service providers 47 00:02:33,320 --> 00:02:37,399 Speaker 2: to offer their content over a non Windows operating system. 48 00:02:37,639 --> 00:02:41,200 Speaker 2: So we will be testing carefully whether it does deliver 49 00:02:41,680 --> 00:02:46,120 Speaker 2: on keeping that market open to competition, supporting innovation and choice. 50 00:02:46,400 --> 00:02:49,640 Speaker 1: The CMA and its initial assessment of the previous offer 51 00:02:49,680 --> 00:02:53,160 Speaker 1: from Microsoft had different from regulators in the European Union 52 00:02:53,480 --> 00:02:56,840 Speaker 1: and the outcome of the decision in the United States 53 00:02:56,840 --> 00:03:00,400 Speaker 1: as well on this deal. Has the CMA band to 54 00:03:00,520 --> 00:03:05,400 Speaker 1: international pressure to get this deal approves. The regulator faced 55 00:03:05,560 --> 00:03:09,640 Speaker 1: quite significant criticism from the parties over its rejection of 56 00:03:09,639 --> 00:03:10,760 Speaker 1: the original offer. 57 00:03:11,120 --> 00:03:13,960 Speaker 2: So the same stands by our original decision, and as 58 00:03:14,000 --> 00:03:16,360 Speaker 2: I say, we have actually confirmed the legal effects of 59 00:03:16,400 --> 00:03:20,480 Speaker 2: that original prohibition decision today. We have been very clear 60 00:03:20,520 --> 00:03:23,600 Speaker 2: to Microsoft when it raised the possibility of restructuring the 61 00:03:23,600 --> 00:03:27,200 Speaker 2: deal that any restructure would need to fully and comprehensively 62 00:03:27,440 --> 00:03:29,840 Speaker 2: address our concerns. It would need to go through a 63 00:03:29,880 --> 00:03:33,320 Speaker 2: new review, a new investigation. That's what we are launching today, 64 00:03:33,480 --> 00:03:35,560 Speaker 2: and we will assess the impact of that new deal 65 00:03:35,600 --> 00:03:38,720 Speaker 2: on competition making sure that we protect UK gamers and 66 00:03:38,760 --> 00:03:40,480 Speaker 2: keep that market open to competition. 67 00:03:41,080 --> 00:03:44,240 Speaker 1: How long should that investigation take, So the. 68 00:03:44,000 --> 00:03:46,960 Speaker 2: First phase of that investigation would be due to be 69 00:03:47,000 --> 00:03:50,920 Speaker 2: completed by the eighteenth of October. We obviously have a 70 00:03:50,920 --> 00:03:52,960 Speaker 2: lot of information that we already have through our pri 71 00:03:52,960 --> 00:03:55,640 Speaker 2: our investigation, so we'll be moving forward with this as 72 00:03:55,720 --> 00:03:58,360 Speaker 2: quickly and as efficiently as we can, but making sure 73 00:03:58,400 --> 00:04:01,160 Speaker 2: that we have a full opportunity to test this deal 74 00:04:01,200 --> 00:04:02,280 Speaker 2: and hear from sub parties. 75 00:04:02,520 --> 00:04:06,160 Speaker 1: Now Microsoft's president, but Brad Smith, had described it as 76 00:04:06,200 --> 00:04:09,600 Speaker 1: being bad for Britain on your original blocking of the deal. 77 00:04:09,640 --> 00:04:12,080 Speaker 1: What sort of dialogue have you had with the company 78 00:04:12,160 --> 00:04:16,760 Speaker 1: since then that has led them to submit this restructured offer. 79 00:04:17,160 --> 00:04:21,000 Speaker 2: The Microsoft indicated that they were interested in exploring a 80 00:04:21,040 --> 00:04:24,240 Speaker 2: restructured deal to address our concerns, and I'd say we 81 00:04:24,279 --> 00:04:26,800 Speaker 2: have been very clear with them that in order to 82 00:04:26,839 --> 00:04:28,479 Speaker 2: do that, they would need to come up with something 83 00:04:28,480 --> 00:04:32,240 Speaker 2: that was substantially different and fully and comprehensively addressed our 84 00:04:32,240 --> 00:04:36,760 Speaker 2: competition concerned. The announcement from Sadsmith today indicates he believes 85 00:04:36,800 --> 00:04:38,479 Speaker 2: they have done that and obviously it will be for 86 00:04:38,560 --> 00:04:40,920 Speaker 2: us to review. That's really investigation that we're starting today. 87 00:04:41,880 --> 00:04:43,800 Speaker 1: Has the CMA been damaged by this? 88 00:04:44,560 --> 00:04:47,760 Speaker 2: I think the CMA is in an incredibly positive position actually, 89 00:04:47,800 --> 00:04:50,960 Speaker 2: because we have been clear that we are protecting competition 90 00:04:51,360 --> 00:04:55,039 Speaker 2: in the UK. That has forced Microsoft to rethink the 91 00:04:55,080 --> 00:04:57,200 Speaker 2: deal structure and come up with a deal that they 92 00:04:57,240 --> 00:04:59,880 Speaker 2: believe addresses are consterns. So I think it puts the 93 00:05:00,080 --> 00:05:02,359 Speaker 2: CMA and the UK in a very good position. 94 00:05:03,040 --> 00:05:08,120 Speaker 1: What's the different for UK consumers with this restructured offer? 95 00:05:09,360 --> 00:05:11,880 Speaker 2: Do We all need to test this very carefully, obviously 96 00:05:11,920 --> 00:05:15,400 Speaker 2: for our investigation, but it appears that this creates the 97 00:05:15,440 --> 00:05:18,599 Speaker 2: possibility to really open up this market, and certainly, looking 98 00:05:18,640 --> 00:05:21,800 Speaker 2: at the statement from Ubisoft today, they have been clear 99 00:05:21,839 --> 00:05:24,600 Speaker 2: that this creates new opportunities to bring cloud gaming to 100 00:05:24,720 --> 00:05:27,120 Speaker 2: a much wider range of users than players. 101 00:05:27,320 --> 00:05:30,479 Speaker 1: Will the rights for the games in question being different 102 00:05:30,560 --> 00:05:33,240 Speaker 1: in the EEA and the rest of the world. Is 103 00:05:33,279 --> 00:05:36,599 Speaker 1: that something that consumers of these products are likely to 104 00:05:36,600 --> 00:05:37,600 Speaker 1: see a difference over. 105 00:05:38,240 --> 00:05:42,160 Speaker 2: I don't think we'll have any impact on the user experience. 106 00:05:42,440 --> 00:05:45,320 Speaker 2: Microsoft have been clear that they want to continue to 107 00:05:45,360 --> 00:05:47,679 Speaker 2: honor the commitments that they have given to the European 108 00:05:47,680 --> 00:05:50,680 Speaker 2: Commission that the user experience should be unaffected. 109 00:05:51,279 --> 00:05:54,840 Speaker 1: What's the message that politicians should take away from this 110 00:05:55,120 --> 00:05:58,599 Speaker 1: as well? Your organization has taken on a much greater 111 00:05:58,720 --> 00:06:02,039 Speaker 1: regulatory role since exists because so much of the competition 112 00:06:02,200 --> 00:06:07,200 Speaker 1: policy was being set and determined out of Brussels previously. 113 00:06:07,680 --> 00:06:10,440 Speaker 1: Does the CMA need more resources to be able to 114 00:06:10,480 --> 00:06:12,479 Speaker 1: make big decisions like this in the future. 115 00:06:13,160 --> 00:06:15,640 Speaker 2: CMA is very well resourced to take on these kinds 116 00:06:15,680 --> 00:06:18,760 Speaker 2: of decisions. And the message really to everybody is that 117 00:06:18,800 --> 00:06:22,200 Speaker 2: the CMA will review every transaction that we consider carefully, 118 00:06:22,440 --> 00:06:25,480 Speaker 2: thoroughly objectively, and we will make sure that we protect 119 00:06:25,520 --> 00:06:28,520 Speaker 2: competition in the market or the UK consumers. 120 00:06:28,760 --> 00:06:31,080 Speaker 1: Is the UK a good place for tech companies to 121 00:06:31,120 --> 00:06:33,320 Speaker 1: be doing business from a regulatory point of view? 122 00:06:33,600 --> 00:06:35,120 Speaker 2: I think the UK is a very good place for 123 00:06:35,360 --> 00:06:36,559 Speaker 2: tech companies to be doing business. 124 00:06:36,600 --> 00:06:39,360 Speaker 1: Yes, okay. Sarah Cardinal, Chief Executive of the Competition and 125 00:06:39,440 --> 00:06:41,880 Speaker 1: Markets Authority, thank you very much for joining us on 126 00:06:41,920 --> 00:06:42,799 Speaker 1: Bloomberg Radio.