The UK needs to “loosen its grip” on Big Tech and steer away from copying the EU’s tough approach to the sector, the founder payments firm Payally has warned.
“We need to be attracting big tech to London, not discouraging it,” Rafal Andzejevski told City A.M.
“For right or for wrong, we left the EU, and I think we need to take our departure as an opportunity to build a point of difference with other financial capitals in the EU,” he said.
“London should resist the temptation to follow the EU’s lead and instead be an open free market where Big Tech and start-ups work hand in hand,” he added.
If the UK adopts a similar approach to the European Union, Andzejevski argued there will be less cash to float around the fintech ecosystem and could even lead to a shortage of top talent.
Big Tech, as the collective group of giants like Apple, Amazon and Google are known, has faced intense scrutiny recently, heightened by a lingering deal between Microsoft and Activision Blizzard.
The deal is yet to get the green light from Britain’s competition watchdog, even after the EU cleared the deal.
Andzejevski said this case was a “prime example” of the UK’s Competition and Markets Authority (CMA) being too harsh.
Despite Andzejevski’s current qualms, he stands by London’s reputation as a leading financial hub.
“The UK has the best route to grow a business because you have got investor security and you have got a legal framework which is pretty clear,” he said.
But, he said: “If acquiring a startup leads to years and years of legal wrangling with the CMA, then Big Tech will just look to other countries and jurisdictions to acquire businesses.”
While some might scoff at the idea of Big Tech working with startups, Andzejevski believes it is “absolutely” realistic.
It should even happen more often, he said, as they have the capital to scale startups through M&A, and propel them to the next stage of growth.
“I think we’ll see dozens of tech start-ups going bust if they don’t consolidate – and the role that big tech could play in preventing that is enormous.”
And he believes London is the best place for this to happen because it attracts some of the world’s best business talent.
“We need to stop seeing Big Tech as the enemy, and embrace the capital and resources they bring to the UK’s most promising fledgling businesses.”
The CMA declined to directly comment on Payally’s remarks. However, a spokesperson for the regulator pointed City A.M. towards a recent speech by the agency’s chief, Sarah Cardell, where she sought to defend its approach.
“Out of thousands of merger transactions impacting on the UK every year, the CMA steps in to prevent just a handful of problematic deals,” she said in a speech in June.
“We continue to clear the vast majority of mergers, including many carried out by the major tech firms such as Meta’s acquisition of Kustomer and Microsoft’s acquisition of Nuance. Most recently, we cleared Amazon’s acquisition of iRobot,” Cardell said. “But where, after careful consideration of all the evidence, we conclude that a merger will substantially lessen competition, including in dynamic and innovative sectors, it’s right that we step in.”