Microsoft wants to complete one of the biggest tech acquisitions in history by June 2023. It just needs regulatory approval.
The plan foresees Microsoft buying video game maker Activision Blizzard for a record $68.7 billion in an all cash deal. The video game company is behind hit franchises such as Guitar Hero, Call of Duty and Diablo.
The Federal Trade Commission is reviewing the case as are antitrust regulators in Brazil and the United Kingdom, trying to determine if the purchase would hurt competition in a global video game industry worth billions of dollars. The U.K.’s Competition and Markets Authority (CMA) announced in September that it was launching a full investigation into the deal, especially whether the acquisition might lead to Microsoft’s Xbox removing Call of Duty from Sony’s PlayStation, or if Microsoft’s cloud gaming service could unfairly benefit from Activision games.
It’s not the only investigation Activision Blizzard faces. Last year, California’s Civil Rights Department (formerly known as the Department of Fair Employment and Housing) sued the company for gender-based discrimination, inequality and harassment. Several executives at the company departed after the suit was filed. Activision attempted to have the suit thrown out, but a court of appeal denied its request Friday. Both sides are asking to delay the trial, slated for February 2023. But Lisa Bloom, an attorney representing eight women with sexual harassment claims against Activision Blizzard, told The Technology 202 last week that her latest client “feels presently that she’s still not getting the jobs that she should have gotten because she was a good employee, had good performance reviews. But she suffered retaliation because of her sexual harassment complaints.”
Other problems haunt Activision Blizzard’s future. The ongoing company culture issues, plus management’s perceived poor communication and layoffs of 12 contractors, prompted workers to aggressively unionize in an industry that has traditionally shied away from organizing. A group of the lowest paid Activision Blizzard workers has formed a union at subsidiary Raven Software, in Madison, Wis., and are engaged in bargaining negotiations with management, while another group, based in Albany, N.Y., looks to hold a union vote on Nov. 18.
There are ongoing calls by both workers and some shareholders for the resignation of Activision Blizzard CEO Bobby Kotick; Kotick has said previously that he plans to stay “as long as is necessary” after Microsoft completes the deal.
Satya Nadella, Microsoft’s CEO, has only briefly addressed the turmoil, telling investors in January, “We believe it’s critical for Activision Blizzard to drive forward on its renewed cultural commitment.” More recently, Microsoft announced it would respect Activision Blizzard workers’ rights to join a union and would enter a so-called labor neutrality agreement with the Communications Workers of America, which backs those workers. In June, Microsoft President Brad Smith told The Post: “We have to be extremely careful under the law to avoid what’s called gun jumping,” referring to unlawful activities from a company still awaiting regulatory approval. “We were not required to [talk to Activision Blizzard] under the merger agreement, and we did not seek their approval to enter into the agreement” with the union.
Questions remain about whether Microsoft’s offer of $95 per share was too high. The company’s shares currently trade for about $72 but sunk as low as $58 in December.
And it remains unclear when the deal might be cleared by the FTC or any of the other regulatory bodies. In February, the FTC said it “does not comment on or confirm the existence of investigations.” If it were to issue a complaint, the FTC said, that would be made public.
Microsoft responded to the U.K. regulator’s antitrust inquiry last week by reassuring gamers that it would not make Call of Duty exclusive, and that its cloud gaming service remains unproven and poses no danger to other consoles and devices, calling the technology “new and immature.” Still, the Activision deal would combine two of the biggest gaming companies in the world. In the same filing to British regulators, Microsoft admitted that Sony and Nintendo far surpass Xbox on number of consoles sold and monthly active users, and that Activision Blizzard’s slate of popular games could bolster Xbox’s commercial appeal.
“Our goal is to bring more games to more people, and we continue to believe Activision Blizzard’s talent and catalogue of games will be valuable in helping us do this,” Microsoft spokesman David Cuddy told The Technology 202.
Report: Telecom giants hiked prices and cut services amid pandemic-era internet initiative
The U.S. government’s $17 billion effort to close the digital divide amid the pandemic has been marred by complaints that major telecom firms forced people to accept price hikes or slower internet speeds if they wanted to apply for federal discounts for their internet bills, Tony Romm reports. The program has also been at risk of fraud, according to the Federal Communications Commission’s internal watchdog. FCC spokeswoman Paloma Perez said “investigations” are underway, and House Energy and Commerce Committee Chairman Frank Pallone Jr. (D-N.J.) said the “companies have a lot to answer for,” and that he “intend[s] to hold them accountable.”
According to the federal government, “more than 14 million households have enrolled in the federal broadband benefit system,” Tony writes. “But the figure represents about a quarter of the estimated 49 million American households that are eligible for help, according to a Washington Post analysis. Telecom experts attribute at least some of the gap to the multibillion-dollar industry that administers the aid.”
Spokespeople for five major telecom firms said in written responses that the broadband benefits are key to keeping Americans online. They also said they were “diligent stewards of federal money and noted many of the discrepancies stemmed from the government’s own actions,” Tony writes.
Google and Justice Department reach agreement over responding to warrants
The Department of Justice has announced an agreement with Google in which the search giant agreed to “upgrade” its internal processes to respond faster and more completely to subpoenas and search warrants, Gerrit De Vynck reports for The Technology 202. The agreement stemmed from a court case between Google and the government over the company’s response to a 2016 search warrant for information that Google had on a cryptocurrency exchange the government was investigating.
Over the past few years, Big Tech’s data troves have become a huge source of information for law enforcement agencies and government investigators, who send tens of thousands of search warrants to companies like Facebook, Google and Apple each year.
As part of the deal between Google and the Department of Justice, Google will allow a third-party representative to evaluate how it complies with the agreement.
“Google has a long track record of protecting our users’ privacy, including pushing back against overbroad government demands for user data, and this agreement in no way changes our ability or our commitment to continue doing so,” said Matt Bryant, a Google spokesperson.
Uber’s in-vehicle ads could be helpful — or invasive
It’s not clear if Uber will follow companies like Netflix by lowering the prices people pay for rides if they sit through ads. But Uber will also have to navigate the fine line of using its trove of customer data for helpful, personalized ads while not creeping out or aggravating users, Tatum Hunter reports.
“If [Uber] annoys riders with ads that are too disruptive or too invasive, it could be disastrous for its business,” said Michael Nevins, chief marketing officer at advertising technology company Equativ.
Uber says advertising will help lower prices by generating more income for drivers. The advertising pivot comes as some riders report high prices for some trips. Average Uber fares in the United States since late 2019 have risen about 37 percent, analytics company YipitData estimates.
Twitter users discussed a Reuters story that said the social network defines its most active users as ones who log in six or seven times a week and tweet three or four times weekly. Our colleague Angel Mendoza:
- Chamber of Progress hosts an event on financial technology today at 1 p.m.
- Alan F. Estevez, the undersecretary of commerce for industry and security, discusses new semiconductor export controls at an event hosted by the Center for a New American Security on Thursday at 10 a.m.
- Amazon senior vice president Dave Limp discusses the company’s satellite internet technology at a Washington Post Live event on Thursday at 10:30 a.m.
