CMA Chief Talks New Microsoft-Activision Deal

Good morning. It's Tuesday, the twenty second of August in London. This is the Bloomberg Daybreak Europe podcast. I'm Stephen Carroll coming up today. In a rare move, the UK's competition regulator says it's reconsidering Microsoft's sixty nine billion dollar acquisition of Activision. The UK based chip designer ARM files for the biggest stock market listing of the year in the United States, and reports emerged that Elon Musk told Pentagon officials he spoke to Vladimir Putin. Let's start with a

It serves as a bit of a bell weather for how much do people really think AI is worth and how valuable is it to the people selling the picks and shovels and videos certainly indicated that it's worth a lot, but ARM will be yet another bellwether and kind of indicate if there are other companies that are building on top of this new AI foundation, they can perform well in this market as well, because we honestly haven't seen a large tech IPO in the last say two plus years,

As Phil Hazlett into there, the initial offering is poised to be the largest in the US since the electric vehicle maker Rivian in twenty twenty one. The NASDAK listing as a blow for British politicians who had lobbied the homegrown tech firm to sell its shares on the London Stock Exchange. SMP has followed Moodies in downgrading the and

I don't think the Fed looks at this as some structural shift again, and I don't think the market should either necessarily like we might be moving. We might be in and continue to be in a higher interest rate environment. I think it's actually hard to make that case right now, you know. So it's like you want to look out, you know, years, Like I think it'll take years for us to get back down to you know, the interest rates really coming down. The Fed funds are coming down.

The SAM Consulting fighter added, it's an unknown how long it will take to bring inflation down. The longer term. Market is shifting on that point as fears of a US recession, EBB and death supply surges. Charles Schwab will cut jobs and close or downsize offices to save at least five hundred million dollars in annual costs as investor pressure mounts more from Bloomberg's Charlie Pallace.

Word came in a regulatory filing. It is the latest step by the brokerage to respond to investor pressure. The company said it will close or downside there is some real estate and reduce headcount. Schwab said earlier this month that it was experiencing temporarily lower netflows of client money as the brokerage sees attrition of some retail and advisory clients. Assets while it integrates td ameerror trade into its business in New York, Charlie Pellett Bloomberg Daybreak Europe.

China is ramping up efforts to support the U one and stop a seller from spiraling. The PBOC fixed the value of the currency far stronger than the market expected as the economy struggles. HSBC head of APAC Equity Strategy Herald vander Linde says no stimulus Bizuka is coming.

China has is a difficult position in the sense because on the one hand, a large part of the economy, which is infrastructure and property, is about to say thirty five forty percent of your economy. They don't really want to go and stimulate that. That's been done in the past. That's why the bad debtors ended up. They don't want to do that. They probably have to do more, but they don't want to maybe use all the stimulus in one go at the very beginning of this process, and

Harold Vanderlinder added he sees market sentiment as extremely poor. Foreign investors are pessimistic after a prolonged appreciation driven by low yields and increasingly shake and increasingly shaky economy. The CEOs of Britain's biggest companies saw on above inflation pay rise last year, but still earned less than before the pandemic. Bloomberg's Ew and Parts reports the bosses of.

The UK's biggest companies saw their pay jump by sixteen percent last year. According to research by the High Pay Center. Medium pay for foot two one hundred CEOs increased to just over three point nine million pounds. That's still seventy thousand pounds short, though of pay packages seen in twenty seventeen. The analysis comes amid soaring inflation that's prompted workers in a number of industries to go on strike. The latest figures also come as some say the UK is becoming

And it's been reported that Elon Musk told Pentagon officials he had personally spoken with Vladimir Putin in October. According to The New Yorker, Musk volunteered the information while briefing military personnel about the role of his Starlink Internet service in Ukraine. Officials were of the view that the SpaceX CEO was becoming nervous about his role in the war and wanted to placate Russian concerns by speaking with the president.

The restructured deal.

The regulator says it's substantially different to the one that was rejected last year. The software giant is eyeing Activision's large catalog of hit titles as it seeks to expand into mobile gaming. The sixty nine billion dollar offer announced last year, would make this the largest tech acquisition ever. Were joined now to discuss by Sarah Cardell, the chief executive of the Competition and Markets Authority. Sarah, good morning to you. Thank you very much for being with us

Yeah, so there are actually two developments that we're announcing today. The first, importantly is that we have finalized the legal order that confirms our p vision decision in relation to the original Microsoft deal. And then, as you say, separately, Microsoft have announced today a new structured deal which is substantially different from the deal that was previously on the table, and the key difference is that this time Microsoft will not be acquiring any of the cloud streaming rights in

What will this deal need to prove to you for you to be able to approve us.

So we have been clear all along that it is absolutely critical to keep this new developing market for cloud gaming open to effective competition, to support innovation, to support choice. We had a real concern previously that Microsoft would be to control the way that that market was going to develop.

The CMA and its initial assessment of the previous offer from Microsoft had different from regulators in the European Union and the outcome of the decision in the United States as well on this deal has the CMA ban to international pressure to get this deal approves. The regulator faced quite significant criticism from the parties over its rejection of the original offer.

So the same stands by our original decision, and as I say, we have actually confirmed the legal effects of that original prohibition decision today. We have been very clear to Microsoft when it raised the possibility of restructuring the deal that any restructure would need to fully and comprehensively address our concerns. It would need to go through a

How long should that investigation take, so the first.

Phase of that investigation would be due to be completed by the eighteenth of October. We obviously have a lot of information that we already have through our for our investigation, so we'll be moving forward with this as quickly and as efficiently as we can. But making sure that we have a full opportunity to test this deal and hear from sub parties.

Now Microsoft's president, but Brad Smith, had described it as being bad for Britain on your original blocking of the deal. What sort of dialogue have you had with the company since then that has led them to submit this restructured offer.

The Microsoft indicated that they were interested in exploring a restructured deal to address our concerns, and I would say we have been very clear with them that in order to do that, they would need to come up with something that was substantially different and fully and comprehensively addressed our competition concerned. The announcement from Sadsmith today indicates he believes they have done that, and obviously it will be

Has the CMA been damaged by this?

I think the CMA is in an incredibly positive position actually, because we have been clear that we are protecting competition in the UK. That has forced Microsoft to rethink the deal structure and come up with a deal that they believe addresses are concerned So I think it puts the CMA under the UK in a very good position.

What's the different for UK consumers with this restructured offer?

Do we all need to test this very carefully obviously for our investigation, but it appears that this creates the possibility to really open up this market, and certainly, looking at the statement from Ubisoft today, they have been clear that this creates new opportunities to bring cloud gaming to a much wider range of users than players.

Will the rights for the games in question being different in the EEA and the rest of the world. Is that something that consumers of these products are likely to see a difference.

Over So I don't think we'll have any impact on the user experience. Microsoft have been clear that they want to continue to honor the commitments that they have given to the European Commission that the user experience should be unaffected.

What's the message that politicians should take away from this as well? Your organization has taken on a much greater regulatory role since Bregxist, because so much of the competition policy was being set and determined out of Brussels previously. Does the CMA need more resources to be able to make big decisions like this in the future.

CMA is very well resourced to take on these kinds of decisions, and the message really to everybody is that the CMA will review every transaction that we consider carefully, thoroughly objectively, and we will make sure that we protect competition in the market or the UK consumers.

Is the UK a good place for tech companies to be doing business? From a regulatory point of view?

I think the UK is a very good place for tech companies to be doing goodness.

Yes, Okay, Sarah Cardinal, Chief Executive of the Competition and Markets Authority, thank you very much for joining us on Bloomberg Radio this morning, as we've had that breaking news that Microsoft has submitted a new deal to be reviewed by the CMA for its act position of the gamesmaker Activision. This is Bloomberg Daybreak Europe, your morning where from the stories making news from London to Wall Street and beyond. Look for us on your podcast feed every morning on Apple,