Can Big Tech Get Bigger? Microsoft Presses Governments to Say Yes.

Author: Yuvi November 21, 2022

 Can Big Tech Get Bigger?  Microsoft Presses Governments to Say Yes.

In recent weeks, Microsoft has accused Sony, its chief video game rival, of misleading regulators. Its lawyers have shown off game consoles, including an Xbox, to British officials. And the president of a major union that wooed Microsoft has spoken up on the company’s behalf to the Federal Trade Commission.

The actions are part of a campaign by Microsoft to counter intensifying scrutiny of its $69 billion acquisition of video game publisher Activision Blizzard, the largest consumer technology deal since AOL bought Time Warner two decades ago, and far bigger than Elon Musk’s recent $44 billion buyout of Twitter.

Microsoft’s aim is simple: persuade skeptical governments around the globe to approve the blockbuster takeover. Sixteen governments must bless the purchase, putting Microsoft under the most regulatory pressure it has faced since the antitrust battles of the 1990s. And in three key places — the United States, the European Union and Britain — regulators have begun deep reviews, with the European Commission declaring this month that it was opening an in-depth investigation of the deal.

Whether Microsoft succeeds in gaining regulatory approval to buy Activision, which makes games such as Candy Crush and Call of Duty, will send a message about Big Tech’s ability to expand in the face of mounting fears that industry giants wield too much power. If Microsoft, whose public affairs operation has spent the past decade building the company’s nice-guy reputation, can’t get a megadeal through, can anyone?

“If this deal had happened four years ago, it would hardly be of any interest,” Brad Smith, Microsoft’s president, said in an interview. “If one cannot do something easy, then we’ll all know you can’t do something hard.”

Google, Meta, Amazon and Apple have all faced increasing accusations that they are monopolies, and regulators have tried to block some of their smaller deals. In July, the FTC sued Meta, Facebook’s parent company, to stop it from buying Within, a virtual reality start-up. Last month, Britain forced Meta to sell Giphy, an image database it bought in 2020 for $315 million.

At the heart of regulators’ concerns about the Activision deal is whether it violates antitrust laws by giving Microsoft outsize power in the video game industry. They worry that Microsoft could pull Activision’s games away from competitors like Sony or use them to get an unfair leg up as more gaming is streamed online.

Mr. Smith said Microsoft was open to formally agreeing to place limits on its business practices to resolve antitrust concerns. But the United States and other countries increasingly see such promises as insufficient unless a company spins off part of its business.

Microsoft’s deal for Activision will demonstrate whether the tech giants can navigate the new environment, said William E. Kovacic, a former FTC chairman. “It’s a fundamental test,” he said.

The road ahead appears long. Of the 16 governments reviewing the deal, only Saudi Arabia and Brazil have approved it. Microsoft said it expected Serbia to approve the deal shortly.

The most crucial regulators appear skeptical of the tech giants. The FTC is led by Lina Khan, a legal scholar and notable critic of Amazon. The European Commission has fined Google for violating antitrust rules and has opened an investigation into Microsoft’s cloud service. In Britain, the Competition and Markets Authority has become increasingly hostile to corporate deals.

In a statement, the Competition and Markets Authority said it would release its findings on the deal in the “new year.” The European Commission said its investigation is “ongoing.” The FTC declined to comment on the deal.

When Microsoft closed its $26 billion purchase of the professional networking service LinkedIn in 2016—at the time its largest acquisition—the deal required just six government approvals.

The Activision deal is “substantially more resource-intensive,” Mr. Smith said.

Obtaining approval for the acquisition is critical for Microsoft. Gaming has become its most important consumer business, surpassing $15 billion in annual sales largely under the Xbox brand. The compensation for Satya Nadella, Microsoft’s chief executive, is partly tied to the growth of Game Pass, the company’s Netflix-like subscription service for gaming. And Microsoft agreed to pay Activision as much as $3 billion if the deal fell apart.

Activision also needs the sale to go through. It was in distress a year ago, with a falling share price as it dealt with revelations of sexual misconduct and worker unrest.

Bobby Kotick, Activision’s chief executive, said in an interview that he had a “high degree of confidence that the regulators will be thoughtful about evaluating the industry.” He added, “I have no reason to believe that we won’t ultimately be successful in the transaction.”

Microsoft’s deal for Activision was unveiled on Jan. 18. In February, Mr. Smith and Mr. Nadella met with officials and people working at think tanks in Washington to position the purchase with the public. During a meeting with reporters, Mr. Nadella said the acquisition would benefit gamers by providing “more choice so they can play any game on any platform.” Courts regularly look at whether a merger will benefit consumers.

Several senators asked the FTC to closely examine the acquisition’s impact on workers. The Communications Workers of America, which had been organizing at Activision, also publicly questioned the deal. Ms. Khan, the FTC chair, has taken a greater interest in scrutinizing how mergers could hurt workers.

Mr. Smith asked lawmakers and government leaders for advice on addressing the labor concerns.

In June, Microsoft hammered out an agreement with the CWA, promising not to oppose unionization at Activision. The negotiations involved “more lawyers than a lawyer convention,” Chris Shelton, the union’s president, said in an interview. The concessions turned the union into supporters of the deal.

Last month, Mr. Shelton met with Ms. Khan and praised Microsoft’s commitment to remain neutral in union campaigns and said the deal should be approved.

“The FTC told me, ‘A lot of companies promise lots of things, then they never keep their promises,’” he recalled. He said he told the agency that the agreement was rock solid, and in writing.

A spokeswoman for the FTC said agency officials had offered no opinions on the deal or the labor agreement in the meeting.

Microsoft has been less successful in neutralizing opposition from Sony, which makes the PlayStation console. Sony has argued that Microsoft could pull Call of Duty from PlayStation to lure players to Xbox.

Microsoft has denied that it would do that. “The first call Satya and I made after the deal was announced was to the CEO of Sony to say, ‘Hey, we’re going to keep Call of Duty on your platform,’” said Phil Spencer, Microsoft’s gaming chief.

Sony was not appeased. In filings in Brazil, the company argued that Call of Duty was such a powerful game franchise that Microsoft could use it to hurt rivals. It hired a consulting firm to set up meetings on Capitol Hill, two people familiar with the matter said. And its arguments were repeatedly cited in a decision by Britain’s regulator in September to pursue a deeper investigation.

Microsoft accused Sony of misleading the regulator, saying it “overstated the importance of Call of Duty to its viability.”

Mr. Spencer said that “maintaining and growing the existing Call of Duty business is pretty central to the economics of the deal.”

In a statement, Jim Ryan, the chief executive of Sony Interactive Entertainment, said it was “not true” that his company had misled regulators. He said that Microsoft was “a tech giant with a long history of dominating industries” and that “it is highly likely that the choices gamers have today will disappear if this deal goes ahead.”

Microsoft said that on Nov. 11 it offered Sony a 10-year deal to keep Call of Duty on PlayStation. Sony declined to comment on the offer.

Last month, Mr. Spencer and other Microsoft executives brought an Xbox, a PlayStation, a Nintendo Switch and other devices to a meeting with regulators in London, where they showed off Call of Duty and other games to illustrate a dynamic market, people familiar with the visit said.

Regulators are also worried about what the deal might mean for the future, when cloud computing lets people stream sophisticated games to various devices, including mobile phones.

In September, the British regulator expressed concern that combining Activision’s library of games with Microsoft’s cloud computing prowess would give Microsoft “an unparalleled advantage” over game-streaming competitors. Microsoft argued that it had “no advantage” because its streaming was not supported by its Azure cloud technology.

In its annual report this year, Microsoft said its streaming product “utilizes” Azure. The company said that while its gaming servers shared data centers with Azure, the hardware was different.

In the United States, more than 10 staff members at the FTC are reviewing the deal, a person with knowledge of the agency said. They interviewed executives, including Mr. Nadella and Mr. Smith, in the late summer and fall.

And in a sign that the FTC may be building a legal challenge to the deal, two people said it had recently asked other companies about offering sworn statements to lay out their concerns.

21 November, 2022, 1:30 pm

News Cinema on twitter News Cinema on facebook

Monday, 21st November 2022

More Stories
Queen was privately ‘devastated’ by Prince Harry and Meghan Markle lashing out at the royal family
Gmail creator predicts total disruption for Google as chatbot ChatGPT challenges tech giant monopoly
World Test Championship 2023: Pakistan’s defeat puts India in driver’s seat to reach final, here’s why
Shylah Rodden’s Melbourne Royal Show rollercoaster crash sees ride operator quit carnivals
Pakistani Actress Hania Ameer Mobbed By Unruly Crowd, Actress Loses Her Cool – Watch Viral Video
After swimsuit look, Priyanka Chopra stuns in hot pink gown for Bulgari event in Dubai – pics
Black and Spanish: A National Team Starts to Reflect All of Its Nation
Cruise ship passengers open up about the moment a rogue wave struck the vessel killing American woman
They thought I was fat: Shilpa Shirodkar reveals why she lost ‘Saiya Saiya’ to Malaika Arora
Hansika Motwani looks radiant in a red bridal lehenga and finally shares her wedding clicks with husband Sohail Katuria!
Kirstie Alley’s death prompts social media users to Tweet ‘you had a good go at it’
Amidst Balenciaga’s controversial ad campaign, Malacca Aurora was party-shy wearing the brand’s dress!
Kirstie Alley’s final TV appearance: Late actress starred on The Masked Singer in April
Kirstie Alley once pined for her costars John Travolta and Patrick Swayze
Happy Birthday Jasprit Bumrah: Watch wife Sanjana Ganesan’s romantic message on the pacer’s special day
‘Drop Dead Gorgeous’ actor Kirsty Alley dies aged 71 after battle with cancer
Why this plain photo of a household bin sitting on a kerbside has shocked Australians
UCLA Adds a Title to the ‘Conference of Champions.’ Will It Be Its Last?
Yankees General Manager Returns on Four-Year Contract
Hertz to Pay $168 Million to Customers Who Say They Were Falsely Accused of Auto Theft
‘Bigg Boss’ OTT winner Divya Aggarwal gets engaged to Apoorva Bhatgaonar months after her breakup with Varun Sood: Pics reveals where the cast of Cheers are following Kirstie Alley’s death
‘The Flash’ is set to return in 2023, insider details
Unified and zero-tolerance approach can eventually defeat terrorism: India’s UN envoy Ruchira Kamboj at meeting over Iraq
Raheem Sterling ‘won’t return to England’s World Cup camp until his family is safe’ after burglary
From Star Trek to Scream Queens: A glimpse at Kirstie Alley’s remarkable film and TV career
Biden Administration Expands Protections for Haitian Migrants
Orion Conducts Return Powered Flyby – Artemis
What Is New York’s Greenest Borough? Probably Not The One You Think.
Florida Ex-Congressman Arrested Over Secret Contract With Venezuela
Zelenskiy warns Ukrainians of ’emergency blackouts’ after Russia’s fresh missile strikes
Four friends are found guilty of kidnapping British ex-public schoolboy, 26, in Italy in ransom plot
Warnock Claims Momentum in Georgia, as Walker Banks on Election Day Turnout
Why made-up swear words are ideal around young ears
North Carolina governor says damage at substations that left 35,000 without power was intentional
Governor Calls Attack on Power Stations a ‘New Level of Threat’
Governor Calls Attack on Power Stations a ‘New Level of Threat’
Michael Avenatti Gets 14-Year Sentence For Stealing Millions From Clients
Neighbors of Fame star Irene Cara says she became a hermit during her final years living in Florida
New Orleans Saints vs. Tampa Bay Buccaneers – NFL LIVE: Play-by-play action
Japan fans again win plaudits for picking up rubbish after defeat to Croatia at Qatar World Cup