Microsoft launches full-court press to save $69B Activision deal
Blocking us would be a big mistake. Huuuuge
Updated Microsoft execs are making an all-out push this week to convince US regulators to support its proposed $69 billion bid for game maker Activision Blizzard, even getting a boost from a labor union that claims the deal would be good for workers.
In short order, Microsoft President Brad Smith wrote an op ed in The Wall Street Journal claiming the acquisition will give gamers more options. Later in the week, Smith reportedly traveled to Washington DC to meet with members of the Federal Trade Commission (FTC), which is said to be mulling whether it will sue Microsoft over the deal.
At the same time, Phil Spencer, executive vice president of gaming at Microsoft, said on Twitter that the company signed a 10-year licensing deal with Nintendo to bring Microsoft's wildly popular Call of Duty game franchise – which is made by Activision Blizzard – to Nintendo's Switch platform. The idea is that the move allays rivals' anticompetition concerns. In his op-ed, Smith said a similar 10-year offer had been made to PlayStation maker Sony, though no agreement has been finalized.
Microsoft has also vowed to continue offering Call of Duty on Valve's Steam gaming platform if the Activision Blizzard deal is completed.
Meanwhile, Chris Shelton, president of the Communications Workers of America (CWA), wrote a column in The Hill claiming the Activision Blizzard acquisition would be a "merger that would help the workers for once."
Get us a sweet piece of that gaming console pie...
This flurry of activity comes as the mega-buy faces multiple regulatory challenges. The European Union in early November launched an antitrust investigation into the proposed acquisition and reports surfaced late last month that the FTC is considering suing Microsoft to block the deal.
Doing this "would be a huge mistake," Smith wrote in The Wall Street Journal. Microsoft trails both Sony and Nintendo in the booming gaming console market.
Bringing Activision Blizzard into the fold would enable Microsoft to better compete in the space and would bolster its Xbox Game Pass subscription service, giving gamers more options via a "full library of popular games," Smith added.
"While modern consumers can stream videos or music on multiple devices on low-cost subscription plans, many games can often only be individually purchased and downloaded onto one device," he wrote. "Microsoft wants to change that by offering consumers the option to subscribe to a cloud gaming service that lets them stream a variety of games on multiple devices."
Sony has been critical of the proposed deal, but Smith noted the 10-year plan offered to the company, writing that not allowing Call of Duty on PlayStation would be "economically irrational."
He apparently hoped to make similar arguments in a meeting today with the FTC's three Democratic members, including Chair Lina Khan, in hopes of avoiding antitrust litigation, according to the New York Post. Christine Wilson, the only Republican commissioner, already has said she supports the deal.
The CWA is now throwing its support behind the proposal. The same day Smith's WSJ column appeared, the union's Shelton argued in The Hill that the FTC's approval could a "bellwether for American antitrust policy" and a "strong statement in favor of economic democracy and provide a blueprint for an enforceable remedy to protect workers from large employers abusing market power to undercut wages and working conditions."
"Labor considerations have for too long been absent from antitrust decisions even though the potential harms to workers as the result of mergers are evident," he wrote, noting the Biden Administration's promises to address those considerations in merger considerations. "Microsoft was well aware of this changed antitrust climate when it announced its intent to acquire Activision Blizzard, knowing that regulators would be taking a close look at the transaction's potential impact on workers."
The CWA has been active in unionizing efforts among quality assurance workers at gaming companies, such as Raven Software, while earlier this month the National Labor Relations Board rejected a second attempt by Activision Blizzard to stop an organizing attempt by QA workers there.
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Shelton noted that in June, Microsoft agreed to a labor neutrality agreement, promising not to interfere with workers' attempts to organize. This agreement will go into force 60 days after the deal closes.
The agreement also is going to be put into practice now that about 300 QA workers at Microsoft-owned ZeniMax gaming studio are voting to form a union supported by CWA, which would be the first union at Microsoft. ®