In a rare television interview, Activision Blizzard CEO Bobby Kotick said he believes UK regulators should “embrace” Microsoft’s proposed acquisition of his company.
Appearing on CNBC’s Squawk Box, the executive was asked about this week’s story from the New York Times, which suggested Microsoft’s legal team expected the UK’s Competition and Markets Authority to oppose the deal.
This report was since revised to emphasise Microsoft has no inclination that such opposition will happen, but given the scrutiny the deal is under – and that the CMA’s decision cannot be appealed in the same way the FTC’s can – the host suggested the UK may be “the end of the line” for the merger.
“Well, you look at the UK and you think about post-Brexit UK, it’s probably the first country where you’re seeing a recession and the real, severe consequences of a recession,” Kotick said in the interview, which you can watch in full below.
“If you’re the UK and you have an incredibly educated workforce with a lot of technical talent, places like Cambridge where the best AI and machine learning is, I would think you’d want to embrace a transaction like this where you’re going to see job creation and opportunity. It really isn’t at all about Sony or Microsoft’s platform, it’s really about the future of technology.
“[UK Prime Minister] Rishi Sunak has said they’d like to be the Silicon Valley of Europe or of the continent, and if deals like this can’t get through, they’re not going to be Silicon Valley, they’ll be Death Valley.”
Kotick’s comments followed a discussion around regulators’ approach to the acquisition, where the focus has been primarily on competition in the console space, as well as cloud gaming and subscriptions.
At the beginning of the interview, the Activision Blizzard CEO emphasised that the majority of the global games market is based around mobile, with players accessing games for free.
On the subject of regulators, he added: “The FTC, the CMA and the EU don’t know our industry, so they’re trying to come up to speed and fully understand the industry better. I don’t think they fully understand it’s a free-to-play business, that the Japanese and Chinese companies dominate the industry with Sony and Nintendo who have these huge libraries of intellectual property… I think [the regulators] are a little bit confused as to where competition is today.
“The best companies in the world right now are companies like Tencent and ByteDance, and these are companies that all have protected markets. We’ve struggled to enter the Japanese market, we can’t enter the Chinese market without a joint venture partner, and so the competition actually isn’t European companies, American companies, it’s really those companies in Japan and China.”
Activision Blizzard is currently seeking a new partner in China having ended its 14-year partnership with NetEase, resulting in the shutdown of seven Blizzard titles in the region.
The interview began with a brief discussion of Activision Blizzard’s latest financial results, where Overwatch 2 and Call of Duty: Modern Warfare 2 leading to a record Q4.
CNBC asked if Activision Blizzard has any sense of whether player behaviour and spending is normalising after the pandemic boost of the past few years, to which Kotick replied: “When you look out over the next few years and you think about the macroeconomic circumstances, it’s not clear yet how our industry or any other industry is going to fare. So while we had a great quarter and a great year, I still think you have to have caution.”
