The Small Business and Entrepreneurship Council (SBE Council) has issued a statement hammering the UK Competition and Markets Authority (CMA) for its activity that will have “a chilling effect on America’s startup ecosystem.”
This past week, the CMA claimed that the acquisition by Facebook (Meta) of GIPHY, Inc. may give rise to competition concerns in both the supply of display advertising in the UK. Meta announced the acquisition of Giphy more than two years ago.
In a related event today, the CMA is investigating Microsoft’s merger with Activision Blizzard. Microsoft announced the acquisition of Blizzard for $68.7 billion in January 2022.
The SBE Council “expressed deep concern about this troubling action” designed to force a US firm to sell an already purchased company.
Raymond J. Keating, SBE Council chief economist, commented:
“This action taken by CMA regulators makes no sense. It is based on a combination of wild, baseless speculation, a gross misunderstanding of how dynamic and competitive markets work, and politics trumping sound economics. And perhaps worst of all, a foreign regulator is creating uncertainty for U.S. entrepreneurs and investors. Acquisition is a key ‘exit’ for many entrepreneurs and investors, with resources often then being re-invested in other entrepreneurial firms. This is a blow against American entrepreneurship.”
SBE Council president & CEO Karen Kerrigan called the action by the CMA unprecedented and startling.
“America’s dynamic and productive startup ecosystem is a model to be admired and replicated, not weakened and destabilized. The U.K.’s CMA has taken direct aim at America’s startup ecosystem through its brash overreach. This is a serious matter that the Biden Administration and Congress must address, as the CMA’s action could snowball and cause disruption for a broad range of U.S. sectors, as well as the health of global entrepreneurship and functioning of capital markets.”
The CMA has missed the mark in the past. It denied the merger between Crowdcube and Seedrs, thus relinquishing the possibility of having a UK-based powerhouse for online capital formation. The CMA appeared not to comprehend that funding is a global market and not an isolated activity in a single jurisdiction.
