UNITED STATES NEWS

Microsoft’s ‘good guy’ approach frays in UK gaming battle

Apr 27, 2023, 1:09 PM | Updated: 1:50 pm

Microsoft’s charm offensive with the world’s governments is starting to lose some of its luster as the software giant is confronting its toughest antitrust scrutiny since co-founder Bill Gates was in charge.

threatening to undermine what could be the priciest tech acquisition ever.

Microsoft’s policy chief responded by calling it a “bad day for Britain” that could make it an unattractive place to do business and warned Prime Minister Rishi Sunak’s government “it needs to look hard” at the role of its antitrust regulator.

“This decision, I have to say, is probably the darkest day in our four decades in Britain,” the company’s president, Brad Smith, told BBC Radio 4. “It does more than shake our confidence in the future of the opportunity to grow a technology business in Britain than we’ve ever confronted before.”

The sharp tone marked a shift for Microsoft, and Smith in particular, who joined the company in 1993 and helped defend it from antitrust enforcers in the U.S. and Europe who targeted the company’s personal computer software empire centered around the Windows operating system.

“Basically, this is Microsoft and Brad Smith throwing their toys out of the pram after they didn’t get the decision they wanted after all the lobbying they did,” said Max von Thun, director of the Europe office of the Open Markets Institute, a proponent of stronger antitrust enforcement.

After legal battles starting in the late 1990s, Microsoft came close to having to break up its business but ended up agreeing to concessions instead. It was eclipsed for a time by rivals like Google, Facebook and Amazon, which drew closer scrutiny from both Wall Street and regulators. Now, it’s back, both as a powerhouse in sectors such as artificial intelligence and cloud computing and as a target for antitrust enforcement.

“They’re struggling to maintain that ‘good guy’ reputation,” von Thun said.

After adopting a confrontational attitude toward regulators at the turn of the century, Microsoft’s senior leaders, led by Smith, have spent years crafting a friendlier and collaborative approach, said William Kovacic, former chair of the U.S. Federal Trade Commission.

“That generated a great deal of goodwill for them around the world,” Kovacic said. ”They’re seen as being in a different category than the other well-known information technology giants. They’re seen as being more reasonable, thoughtful.”

But it’s not just Microsoft that has changed. Behind the heightened attention on technology companies is a belief that regulators were too weak over the past two decades in preventing monopolies. Kovacic said the “halo effect” of pitching itself as a good partner with governments only goes so far if the regulator believes a deal could harm competition. Not only that, but some of the dozens of nations with antitrust laws are increasingly talking with each other.

“A number of jurisdictions are coming to realize that their effectiveness increases if they operate as a coalition,” Kovacic said. “They share thoughts about strategy. They share thoughts about timing.”

In his comments to the BBC, Smith said the “English Channel has never seemed wider” as he compared the United Kingdom unfavorably with regulators for the 27-nation European Union, who are due to make a decision on the Activision deal in May.

Smith said that “people are shocked, people are disappointed” by the U.K. decision. Microsoft and Activision have vowed to appeal.

The company may end up with a more favorable ruling in Brussels, but Microsoft still has to contend with the FTC, which has challenged the deal in the U.S. and is taking the company to trial in August.

“We’re not alone,” Sarah Cardell, chief executive of Britain’s Competition and Markets Authority, told BBC 4’s Today program of her agency’s decision and the pending FTC lawsuit. “There is a lot of alignment there.”

Cardell defended the decision, saying the U.K. is “absolutely open for business” and the regulator wants “to create an environment where a whole host of different companies can compete effectively, can grow and innovate.”

The regulator’s concern was over cloud gaming, or games streamed over the internet, which represents a tiny fraction of the industry today but where Microsoft, owner of the Xbox game system, already has the most powerful platform and would become more so with the Activision takeover, making it harder for other platforms to compete, Cardell said.

Macquarie Group analyst Sarah Hindlian-Bowler said it will “be challenging, but possible” for Microsoft to complete its Activision takeover without the U.K.’s support. She also said it made sense for Smith to call out the CMA, a relatively new body formed several years before Britain’s exit from the EU.

“Microsoft is dancing an incredibly delicate ballet,” Hindlian-Bowler said. “I think the aggressive comments from Microsoft really are intended to get British lawmakers and the British people to be really aware that this body, that I think is attempting to do good, may actually do more to set the U.K. back.”

Microsoft has long pitched itself as a government partner, working with local governments Poland to build the data centers that power its cloud computing business and touting its ability to defend cybersecurity, including in places like Ukraine. It’s proposed regulations to safeguard artificial intelligence and data privacy, though sometimes at the expense of more data-hungry rivals like Google and Facebook parent Meta.

Microsoft also has faced other scrutiny, including complaints to European regulators that it is leveraging its position to lock customers into its Azure computing platform or bundling its Teams communications software with the rest of its Office suite of workplace products. And while Microsoft has endorsed broad AI safeguards, the rapid commercialization of ChatGPT-like products could bring about conflicts for the company amid a growing push to rein in the technology.

—————————

AP writer Kelvin Chan in London contributed to this report.

United States News

Associated Press

Trial of ‘Rust’ armorer to begin in fatal film rehearsal shooting by Alec Baldwin

SANTA FE, N.M. (AP) — Attorneys prepared to make opening statements Thursday at the first trial related to the fatal shooting of a cinematographer by actor Alec Baldwin during a rehearsal for the Western film “Rust.” Before Baldwin’s case progresses, the movie’s weapons supervisor is being tried on charges of involuntary manslaughter and tampering with […]

1 hour ago

FILE - Darryl George, a 17-year-old junior, before walking across the street to go into Barbers Hil...

Associated Press

Trial to determine if Texas school’s punishment of a Black student over his hair violates new law

ANAHUAC, Texas (AP) — A trial is set to be held Thursday to determine if a Black high school student in Texas can continue being punished by his district for refusing to change his hairstyle, which he and his family say is protected by a new state law that prohibits race-based hair discrimination. At issue […]

1 hour ago

In this undated image provided by Haylee Wendling, family members of Colin Conner pose for a photo ...

Associated Press

Amid fentanyl crisis, Oregon lawmakers propose more funding for opioid addiction medication in jails

PORTLAND, Ore. (AP) — Kendra Sawyer spoke with her dad from the Deschutes County jail and told him she loved him. Six hours later, in the throes of opioid withdrawal, the 22-year-old took her own life. A year later, Sawyer’s father, Kent, is left wondering whether his daughter, troubled as she was, might still be […]

1 hour ago

FILE - New York Attorney General Letitia James speaks Feb. 16, 2024, in New York. Donald Trump coul...

Associated Press

New York AG says she’ll seize Donald Trump’s property if he can’t pay $454 million civil fraud debt

NEW YORK (AP) — Donald Trump could be at risk of losing some of his prized properties if he can’t pay his staggering New York civil fraud penalty. With interest, he owes the state nearly $454 million — and the amount is going up $87,502 each day until he pays. New York Attorney General Letitia […]

1 hour ago

FILE - N.C. Association of Educators Vice President Bryan Proffitt speaks during a news conference ...

Associated Press

Going on 30 years, an education funding dispute returns to the North Carolina Supreme Court

RALEIGH, N.C. (AP) — Longstanding education funding litigation is returning to North Carolina’s highest court hardly a year after a majority of justices — all Democrats — agreed that taxpayer money could be moved to spend on addressing schooling inequities statewide without the express approval of legislators. What’s apparently changed to permit Thursday’s scheduled oral […]

1 hour ago

This combo photo shows Republican presidential candidate former UN Ambassador Nikki Haley, left, in...

Associated Press

South Carolina’s Republican primary: What to watch as Haley tries to upset Trump in her home state

COLUMBIA, S.C. (AP) — Nikki Haley ‘s best-case scenario for her home state’s Republican primary might be to do well enough to make the March 5 Super Tuesday slate somewhat competitive against Donald Trump. An upset in South Carolina, though, is a longshot in a state where Republicans like their former governor but love the […]

2 hours ago

Sponsored Articles

...

Collins Comfort Masters

Avoid a potential emergency and get your home’s heating and furnace safety checked

With the weather getting colder throughout the Valley, the best time to make sure your heating is all up to date is now. 

...

Day & Night Air Conditioning, Heating and Plumbing

Valley residents should be mindful of plumbing ahead of holidays

With Halloween in the rear-view and more holidays coming up, Day & Night recommends that Valley residents prepare accordingly.

...

Canvas Annuity

Interest rates may have peaked. Should you buy a CD, high-yield savings account, or a fixed annuity?

Interest rates are the highest they’ve been in decades, and it looks like the Fed has paused hikes. This may be the best time to lock in rates for long-term, low-risk financial products like fixed annuities.

Microsoft’s ‘good guy’ approach frays in UK gaming battle