Succession: CMA would block a Waystar merger just like Microsoft – and it hurts Britain
No spoilers, I promise.
Succession builds towards its climax. Logan Roy, played by a full tilt Brian Cox, is trying to finalise a merger between his media conglomerate Waystar Royco – a hybrid of News Corporation and Disney – and the up and coming tech business GoJo.
Imagine the final scenes. Months of globe-trotting negotiations in sharp suits and black helicopters, endless family intrigue and high politics. At the final moment it looks like the deal might go ahead. Then the Brits show up.
The Competition and Markets Authority blocks the deal because of the potential that, without a merger, Waystar might have to arrange its own entry into – say – the potentially exciting cloud theme park sector.
There are real-world analogues. UK regulators have been the most hawkish recently in blocking mergers between tech companies.
Facebook and GIPHY on the grounds that maybe GIPHY is going to become a competitor in the ad-funded social network market. Never mind that TikTok and Amazon are already tearing strips off them in the digital advertising market that pays the bills.
Microsoft and Activision Blizzard on the grounds that it make it harder for others to compete in the nascent cloud gaming sector. Never mind that in the existing console gaming market Microsoft is running third. Or that the European Commission looked at the same set of facts and concluded that the deals Microsoft had promised as part of the merger would actively help new entrants in the cloud gaming market.
Merger decisions, and competition policy more generally, are always hard to the extent they involve speculating about the future of dynamic markets. It is really easy for regulators to frustrate the actual competition that comes from businesses leveraging their diverse strengths in ever-changing markets, chasing the mirage of a commoditised level playing field and perfect competition.
However, none of this is giving people confidence that the CMA will act cautiously when it is given the eye-watering “quasi-legislative” (as an author for Linklaters put it) powers envisaged under the Government’s new Digital Markets, Competition and Consumers Bill.
All of a sudden the CMA is going to have incredibly broad powers to regulate digital platforms, much broader even than the obligations in the EU’s Digital Markets Act, a similar law running about a year ahead. The EU’s intervention is mammoth, but compared to the UK Bill the requirements are at least spelled out in the law.
In the UK, the CMA gets close to a blank cheque. It will also be subject to much less scrutiny than normal with appeals limited essentially to the process, versus the merits of the case, and the “countervailing” benefits that should force thinking about the big picture coming in too late in the process.
All of this is going to end in mistakes.
Mistakes that will have consequences for UK consumers, as the UK becomes a risky market to launch new services and we no longer get the best services early (Google’s Bard competitor to ChatGPT, for example, launched here before the EU). And in turn for the UK’s tech sector.
Once we are no longer the place exciting new services get launched early, it will make less sense to build those services here as well.
Regulators have a vital role in translating a clear framework from the Government into specific decisions, that’s the role for their independence. The problem comes when politicians ask them to take on a wider role, that quasi-legislative role where they are really making up the policy framework itself and without the oversight needed.
The fictional Waystar would have a business decision to make over whether to try to make a go of it on its own, despite the show making clear its “StarGo” app is a dire mess, or bring its content to market working with a technology business like GoJo.
Whether that enables a more effective competitor to whoever else is out there in Succession’s fictional world we cannot know. But there is every reason why politicians should be cautious about inserting UK regulators theorizing from London into that kind of story.
The author is an economist and a former No10 adviser