Product Management Confabulation
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After an exhaustive review by regulators in the United States and across the globe, Microsoft’s proposed acquisition of Activision Blizzard is on track to close later this year. The European Commission approved the transaction in May, the Federal Trade Commission has suspended its administrative challenge, and negotiations are underway with the United Kingdom’s Competition and Markets Authority.
As the newly elected president of the Communications Workers of America, I am extremely encouraged by these developments. Thanks to the regulatory process, this deal will significantly enhance competition in the video game industry while securing workers’ rights and consumer interests.
In a complaint filed to block the acquisition, the FTC commissioners expressed concern that Microsoft would stifle competition by withholding popular Activision video games from other game consoles and streaming services. The concessions Microsoft has made to win approval from the European Commission not only address those concerns, but they also expand the availability of Activision titles to additional cloud gaming services that did not previously carry titles like Call of Duty.
That’s a significant win for consumers. Under the terms of the merger, Microsoft will be doing more to ensure that its games are available on multiple platforms than Activision Blizzard is currently doing and more than its chief competitor, Sony, which blocks U.S.-based competitors from competing in Japan’s gaming market.
For workers, the potential benefits are even more dramatic.
The FTC commissioners expressed concern that Microsoft would stifle competition.
The technology and video game industries are notorious for enabling toxic and discriminatory work environments and for fighting workers who want to organize a union. I have seen this firsthand. Prior to my election as president of CWA, as district vice president for the south-central region of the United States, I supported the historic efforts of YouTube music contractors who successfully voted to join our union. Now YouTube parent company Alphabet is refusing to recognize the union. At Apple, my region’s Oklahoma City store was the second in the United States to win union representation, and in the course of our organizing, we uncovered evidence of racial inequities in the opportunities available to workers.
Employer resistance to workers’ collective action has been particularly prevalent at Activision Blizzard. When quality assurance workers at two studios decided to address their low pay and other poor working conditions by organizing to join our union, the company responded with a relentless and illegal campaign to prevent them from even holding a vote.
Microsoft has taken a different approach. The company worked with us to negotiate an unprecedented, enforceable labor neutrality agreement, which, if the merger is approved, would allow workers at Activision Blizzard to freely and fairly make a choice about union representation. The fact that workers’ concerns entered the acquisition conversation is in no small part thanks to the new antitrust emphasis on labor markets championed by the Biden administration.
Although the terms of our agreement only apply to Activision Blizzard employees after Microsoft closes its acquisition, Microsoft executives made good on those principles for their own employees earlier this year. When quality assurance testers at the company’s Zenimax studio expressed interest in joining CWA, they were allowed to choose for themselves whether to join. No one was fired in retaliation for union activity. No one was forced to attend mandatory meetings and listen to union-busting pitches. The process was simple, free, and fair, the way it should be.
Sadly, Microsoft stands alone among major U.S. video game and tech companies. Sony’s U.S. workforce is in the same position as Activision Blizzard’s, left to struggle under weak labor laws that companies often ignore. At this year’s Game Developers Conference, a group of video game workers delivered a letter to Sony’s management asking the company to agree to allow its workers to organize free from retaliation and interference. The response? Silence.
Collective bargaining plays a critical role in counterbalancing employer market power. It constitutes a structural change to the labor market wherever it happens, enabling workers to achieve needed improvements to their wages and working conditions through their combined bargaining power. Under FTC chair Lina Khan’s leadership, the Commission’s intention to examine labor market impacts of mergers is well known. The draft merger guidelines that were recently released by the FTC and the Department of Justice begin to formalize that intention.
The global commitments Microsoft has made on the consumer front paired with its game-changing labor market commitments will not only prevent harm to consumers but will also give workers a seat at the table that antitrust policymakers had until recently long excluded them from and that our democracy once again demands.
Microsoft and Sony signed an agreement to bring Call of Duty games to PlayStation consoles. As a reminder, Microsoft offered to acquire Activision Blizzard for $69 billion. And yet, 18 months after the announcement, that acquisition hasn’t closed as several competition regulators have been concerned about the consequences on the gaming market.
That’s why today’s deal between Sony and Microsoft is an important milestone in this M&A saga. “We are pleased to announce that Microsoft and @PlayStation have signed a binding agreement to keep Call of Duty on PlayStation following the acquisition of Activision Blizzard. We look forward to a future where players globally have more choice to play their favorite games,” Microsoft Gaming CEO Phil Spencer wrote on Twitter.
“From Day One of this acquisition, we’ve been committed to addressing the concerns of regulators, platform and game developers, and consumers. Even after we cross the finish line for this deal’s approval, we will remain focused on ensuring that Call of Duty remains available on more platforms and for more consumers than ever before,” Microsoft Vice Chair and President Brad Smith also wrote on Twitter.
Regulators have been concerned that Microsoft would only release Activision Blizzard titles on Xbox consoles (and potentially PCs) after the merger. In February, Microsoft signed a 10-year deal with Nintendo to bring Xbox games to Nintendo consoles, including Call of Duty games.
Shortly after that, the company also announced 10-year agreements with cloud gaming services, such as GeForce Now and Boosteroid. While the European Commission approved the merger, the U.K.’s Competition and Markets Authority (CMA) blocked the acquisition due to concerns for the cloud gaming market as Microsoft also maintains Windows, the leading desktop operating system, and operates a “significant cloud infrastructure.”
But now, Sony has finally agreed to sign a deal with Microsoft to bring some of Microsoft’s games to Sony consoles. Unlike the other agreements with Nintendo and cloud gaming services, Microsoft only mentions Call of Duty titles. The Verge confirmed with Microsoft that it is a 10-year commitment.
Sony has been reluctant to sign an agreement with Microsoft as the PlayStation maker hoped that authorities would block the acquisition of Activision Blizzard altogether.
Last week, a federal judge denied a preliminary injunction request from the Federal Trade Commission (FTC). If Microsoft can find some form of resolution with the CMA, that court order should likely clear the way for the acquisition.
That’s likely why Sony changed its stance on a Call of Duty deal. There should be more news from Microsoft, the FTC and the CMA in the coming days.
Update: The FTC confirms that it has requested a “temporary restraining order” preventing the deal from going through while reviews are underway. Original story follows this statement from the agency:
Microsoft and Activision Blizzard have represented in the past that they cannot close their deal due to antitrust reviews of the transaction in other jurisdictions. But Microsoft and Activision have not provided assurances that they will maintain that position. In light of that, and public reporting that Microsoft and Activision Blizzard are considering closing their deal imminently, we have filed a request for a temporary restraining order to prevent them from closing while review continues.
Microsoft’s proposed $68.7 billion acquisition of Activision Blizzard has received a mixed response from regulators around the world, but the Federal Trade Commission may be its biggest critic. The agency has reportedly applied for an injunction to prevent the deal going ahead before its own official judgment on the situation later this year.
Microsoft announced its intention to buy the gaming giant early last year as a way to bolster its own Xbox and PC gaming division, which has struggled to outplay perennial rival Sony. (Though yesterday’s impressive Xbox showcase clearly indicates that the war is far from over.)
This was followed by a flurry of concerned statements from antitrust regulators around the world, who said industry consolidation like this produces few benefits and plenty of risks for consumers. Several investigations are underway, and the U.K. has even moved to block the deal, though that is being appealed in court there.
Cue the FTC, which already has a lawsuit challenging the acquisition, but that is not scheduled to be heard by its own administrative law judge until August. So the agency is reportedly asking for an injunction against the deal now — essentially, asking a judge to pre-judge whether the lawsuit is likely to succeed, whether harm could occur during the legal process, and if so prevent the deal from going forward in the meantime. CNBC first reported the move.
The agency did have a closed-door meeting this morning for “consideration of a nonpublic law enforcement matter,” which very well could be the matter in question.
Such decisions generally require the case to be pretty clear, though, and this one may not be. When it filed the lawsuit, the FTC said “we seek to stop Microsoft from gaining control over a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets.”
To call Activision Blizzard an “independent game studio” is something of a stretch: the enormous conjoined corporation is responsible for some of the world’s most popular games, including Diablo IV, which just set launch sales records last week — across all platforms, it must be said. And Microsoft has been careful to state its support for multiple platforms on many of its own marquee titles since the acquisition announcement.
I have contacted the FTC for confirmation and more details and will update this post if I hear back.
FTC reportedly seeks injunction to stop Microsoft’s Activision Blizzard deal by Devin Coldewey originally published on TechCrunch
Microsoft announced another ten-year agreement to bring its Xbox game lineup to cloud gaming service Boosteroid. This is Microsoft’s third deal with other gaming platforms as the company is trying to convince regulators that they should approve the acquisition of Activision Blizzard.
Last year, Microsoft announced its intention to buy Activision Blizzard for $68.7 billion. Activision Blizzard is one of the largest video game publishers in the world. The company and its internal studios are behind some very popular gaming franchises, such as ‘Call of Duty’, ‘Diablo’, ‘World of Warcraft’ and ‘Candy Crush Saga’.
But Microsoft has run into regulatory challenges in the U.K., the U.S. and the European Union. In particular, European regulators will take a decision on whether to clear or block the acquisition by April 11, 2023. In other words, it’s a matter of days before regulators say Microsoft can move forward.
That’s why Microsoft is announcing long-term commitments to bring ‘Call of Duty’ games and the rest of its catalog to other platforms — not just Xbox gaming consoles. Last month, Microsoft President Brad Smith announced a deal with Nintendo and another deal with Nvidia’s GeForce Now service.
Today, the company is adding a third partner and promises that Microsoft games will be available on Boosteroid for the next ten years. Boosteroid is a relatively small cloud gaming service that works more or less like Nvidia GeForce Now.
Instead of running games on your local device, games run on a gaming-optimized server in a data center near you. The video stream is then sent to your display. When you press a button on your controller, the action is relayed to the server.
Like on Nvidia’s cloud gaming service, the company isn’t a Netflix-like subscription. Instead, users have to buy individual games on online PC stores like Steam and the Epic Games Store. Boosteroid customers pay a monthly subscription fee to access the company’s servers. If they stop their subscription, users still own the games that they bought.
While Boosteroid doesn’t disclose the hardware specifications of its servers, the company promises a resolution of 1080p at 60 frames per second. The service costs €9.89 per month or €89.99 per year ($10.61 and $96.57 at today’s exchange rate respectively).
Originally from Ukraine, Boosteroid has servers in Europe (France, Italy, Romania, Serbia, Slovakia, Spain, Sweden, Ukraine and the U.K.) and the U.S. (Pennsylvania, North Carolina, Texas, Illinois, Florida and Washington). As latency is key for cloud gaming, living near a data center is very important.
Boosteroid says that it has 4 million registered users. The service works in a web browser and the company also has dedicated applications for Windows, macOS, Android, Android TV and Linux. As for Sony, Microsoft hasn’t reached an agreement to make future ‘Call of Duty’ games available on PlayStation consoles.
Microsoft signs another ‘Call of Duty’ deal with cloud gaming company Boosteroid by Romain Dillet originally published on TechCrunch
Seven months after the U.K.’s Competition and Markets Authority (CMA) confirmed it was launching an antitrust investigation into Microsoft’s $68.7 billion bid for video game giant Activision Blizzard, the U.K. regulator has provisionally concluded that the merger “could harm U.K. gamers” through higher prices, fewer choices, or less innovation.
Microsoft first revealed plans for its mega-bucks Activision acquisition last January, a deal that would make Microsoft the third-biggest gaming company in the world by revenue behind Tencent and Sony. More importantly, it would also give Microsoft direct control over well-known franchises such as Call of Duty and World of Warcraft.
The deal has garnered significant scrutiny from the get-go, with various bodies around the globe noting that Microsoft could use its clout to limit the distribution of Activision Blizzard games to rival distributors and platforms. The European Union (EU) is currently engaged in an in-depth probe, and reportedly issued Microsoft with a formal warning last week, while the Federal Trade Commission (FTC) in the U.S is suing to block the deal. The U.K., meanwhile, announced its in-depth investigation back in September, noting at the time that the merger could result in a “substantial lessening of competition” in the U.K. gaming market.
Now, the U.K. has pretty much cemented that hypothesis in stone, saying that if the deal was greenlighted it may strengthen Microsoft’s cloud gaming credentials and stifle competition, leading to higher prices if Microsoft was to drive rival gaming companies out of the market.
Specifically, the CMA said that the deal could weaken Microsoft’s rivalry with Sony, with operates the competing PlayStation console. Call of Duty, for example, is presently available across Microsoft’s Xbox and Sony’s PlayStation consoles, among other platforms. World of Warcraft, meanwhile, is currently only available on PCs and Macs. In a world where Microsoft pulls the strings, things could look a lot different.
The CMA’s report said:
The evidence available to the CMA, including data on how Microsoft measures the value of customers in the ordinary course of business, currently indicates that Microsoft would find it commercially beneficial to make Activision’s games exclusive to its own consoles (or only available on PlayStation under materially worse conditions).
The CMA’s provisional findings note that this strategy, of buying gaming studios and making their content exclusive to Microsoft’s platforms, has been used by Microsoft following several previous acquisitions of games studios.
Rima Alaily, Microsoft’s corporate vice president and deputy general counsel, said that the company is committed to giving “easily enforceable solutions” that address the CMA’s competition concerns.
“Our commitment to grant long term 100% equal access to Call of Duty to Sony, Nintendo, Steam and others preserves the deal’s benefits to gamers and developers and increases competition in the market,” she said.
When defining what it means by “100%,” the company clarified that it means parity across content, pricing, features, quality, and playability — but only for a 10-year period. This aligns with commitments the company recently announced regarding its competitors.
In terms of what happens next in the world of Microsoft and Activision, today’s announcement is essentially to solicit a final round of feedback from “interested parties.” This will of course include both Microsoft and Activision Blizzard, as well as competitors, which have until March 1, 2023, to respond, with the CMA sending the two companies a separate report explaining how its concerns can be addressed.
The CMA said it expects to file its final report by April 26, 2023.
In response to today’s announcement, an Activision spokesperson suggested that the CMA may not have fully understood the gaming industry, something it hopes to address in the coming months.
“We hope between now and April we will be able to help the CMA better understand our industry to ensure they can achieve their stated mandate to promote an environment where people can be confident they are getting great choices and fair deals, where competitive, fair-dealing business can innovate and thrive, and where the whole U.K. economy can grow productively and sustainably,” the spokesperson said.
The U.K.’s antitrust authority has raised a number of cases against “big tech” M&A activity in recent times, perhaps most notably against Facebook parent company Meta which was ordered to sell GIF platform Giphy. Facebook had acquired Giphy for $400 million back in 2020, but the CMA asserted that the deal would limit choice for U.K.-based social media users and reduce innovation in display advertising. Despite much protestation, Meta later agreed to divest Giphy.
Microsoft’s multi-billion dollar Activision pursuit is an entirely different proposition, of course, so it’s difficult to know at this juncture what Microsoft and Activision will do if they can’t make the CMA reverse course. But it’s also worth noting that there are multiple regulators looking closely at this transaction, and they may be comparing notes — so today’s verdict could be a sign of what’s to come elsewhere in Europe and the U.S.
“The CMA’s decision, whilst provisional, is notable in that it suggests structural commitments — e.g. divestiture — may be the only way for the merging parties to allay its competition concerns,” said Alex Haffner, competition partner at London-based law firm Fladgate. “This would obviously call into question the strategic rationale for the deal. It is also important because the CMA is one of several regulators considering the transaction, and those regulators will undoubtedly be in close contact with and sharing their competitive assessments one another.
It is clear therefore that Microsoft faces a stiff challenge to get the global regulatory green light for the transaction on terms which it will be able to live with commercially.”
UK regulator says Microsoft’s proposed $68.7B Activision merger could create ‘higher prices, fewer choices’ by Paul Sawers originally published on TechCrunch
Activision Blizzard COO Daniel Alegre is leaving the gaming giant to take over as CEO of Yuga Labs, the company behind the Bored Ape Yacht Club. Yuga’s first and current CEO Nicole Muniz will stay on as a strategic advisor.
“Nicole, Greg, and I have been on the hunt for someone with Daniel’s skill set for some time,” said Yuga co-founder Wylie Aronow in a press release. The crypto company wanted to appoint a gaming veteran as CEO to help work on projects like Otherside, its metaverse gaming platform. As an executive who oversaw franchises like “Call of Duty,” “World of Warcraft” and “Candy Crush,” Alegre fits the bill. He also worked at Google for over sixteen years, in roles such as President of Global and Strategic Partnerships.
In March, prior to crypto meltdowns like the implosion of FTX and Terra’s UST, Yuga Labs raised $450 million from Andreessen Horowitz at a $4 billion valuation. After last month’s FTX bombshell dropped, the price to buy your way into the Bored Ape Yacht Club had decreased by 82% since its peak in April, according to Decrypt. But the greater industry concerns haven’t seemed to stall Alegre.
“Since exploding onto the scene with Bored Ape Yacht Club in 2021, Yuga Labs has quickly made a name for itself through a powerful combination of storytelling and community-building,” said Alegre in a statement. “The company’s pipeline of products, partnerships, and IP represents a massive opportunity to define the metaverse in a way that empowers creators and provides users with true ownership of their identity and digital assets.”
Alegre is not the first major gaming executive to jump over to crypto. In January, Ryan Wyatt left his role as head of YouTube Gaming to become CEO of Polygon Studios.
The jump from an established executive role into a volatile industry might seem risky, but Activision Blizzard has been riddled with conflict itself. A report from the Wall Street Journal last year found that Activision Blizzard CEO Bobby Kotick knew for years about rampant sexual harassment at the company, but failed to act. For over a year, Activision Blizzard employees have protested against the company’s poor handling of ongoing sexual harassment allegations, which in part inspired an historic union movement for the gaming industry. But on employees’ way to establishing two formally recognized unions, Alegre was caught in the crossfire.
In October, the National Labor Relations Board (NLRB) found that Activision Blizzard illegally withheld wages from workers who were in the process of unionizing. In testimony, the NLRB learned that Alegre offered to fly to Wisconsin to speak with unionizing QA testers at subsidiary Raven Software. This practice would be barred by the National Labor Relations Act, though, since it can lead to coercion. At the time, Activision Blizzard told TechCrunch that the company denied the accuracy of the complaint, since Alegre’s proposed meeting would not be mandatory and not address grievances. Furthermore, the meeting never took place.
Activision Blizzard’s future ownership is also up in the air. Microsoft has an agreement with the gaming company to acquire it for $68.7 billion, one of the most expensive tech acquisitions in history. But now, the Federal Trade Commission is suing to block the deal, claiming that it would stifle competition.
Alegre’s term at Activision Blizzard concludes at the end of March, per an SEC filing. Yuga says that Alegre will take the helm in the first half of 2023.
Bored Apes creator Yuga Labs appoints Activision’s Daniel Alegre as CEO by Amanda Silberling originally published on TechCrunch
The FTC announced Thursday that it would sue to block Microsoft’s acquisition of gaming giant Activision Blizzard. Microsoft announced plans to buy the company, which has been plagued by sexual harassment and discrimination allegations and labor disputes, back in January for $68.7 billion.
The deal would be mark a seismic shift in the gaming industry — Activision Blizzard owns hugely popular games like the Call of Duty franchise and World of Warcraft — but the massive size of the deal and the prevailing anti-consolidation sentiment meant that it was due for some intense regulatory scrutiny from day one.
In its statement, the FTC cites concerns that the deal would “enable Microsoft to suppress competitors” to Xbox, including its paid Game Pass subscription service and cloud gaming services.
“Microsoft has already shown that it can and will withhold content from its gaming rivals,” FTC’s Bureau of Competition Director Holly Vedova said. “Today we seek to stop Microsoft from gaining control over a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets.”
PlayStation maker Sony, Microsoft’s console rival, has loudly objected to the proposed merger, which would consolidate some of the world’s most popular games under the Xbox’s banner. In recent weeks, Microsoft has been attempting to stave off the regulatory threat by promising to give Call of Duty equal treatment on the PlayStation and even agreeing to bring the franchise to Nintendo if the deal goes through.
The FTC is suing to block Microsoft from buying Activision by Taylor Hatmaker originally published on TechCrunch
Activision Blizzard QA testers who work on “Diablo” in Albany, New York have formed the gaming giant’s second union in an unanimous 14-0 vote. Just seven months ago, QA testers at Activision Blizzard division Raven Software won a historic vote to form the first ever union at a major U.S. gaming company.
Activision Blizzard initially tried to block the union vote, arguing that developers at the Albany studio should be included in the unit. But the National Labor Relations Board (NLRB) ruled that the vote could go ahead as planned.
“With this victory, we’re advocating for ourselves and each other because we care deeply about our work and the games we make. Organizing has empowered all of us to fight hard for the dignity and respect every worker deserves on the job,” said Amanda Deep, an Associate Test Analyst at Blizzard Albany in a statement.
The “Diablo” QA testers will be unionized under the Communication Workers of America, which also represents the Raven Software union.
“Our colleagues at Raven inspired us when they announced the formation of the Game Workers Alliance/CWA. We can only hope that our win will continue to grow the labor movement at other video game studios across the country,” Deep said.
Labor organizers in the gaming industry are organizing to “to reject burn out culture, crunch, wage discrepancies and more,” the CWA said. But union activity at Activision Blizzard has been met with much pushback from management. In May, the NLRB found merit to a complaint that Activision Blizzard allegedly threatened employees for discussing their working conditions and wages.
Activision Blizzard workers in Albany vote to form the company’s second union by Amanda Silberling originally published on TechCrunch
In a somewhat surprising turn, Blizzard Activision, the California-based gaming publisher behind global hits like World of Warcraft and Overwatch, will be suspending most of its games in China due to the expiration of licensing agreements with NetEase, the second-largest gaming company in the country.
Blizzard’s announcement is set to end a 14-year licensing partnership between the two gaming giants. All told, Blizzard has been providing gaming services in China through various partners, including Electronic Arts-backed The9, for 20 years.
From January 2023, most of Blizzard’s titles will stop operating in China. That includes the likes of World of Warcraft, Warcraft III: Reforged, Overwatch, the StarCraft series, and Diablo III.
Diablo Immortal co-development and publishing is covered under a separate agreement between the two companies, Blizzard said.
The companies each released their own response explaining the end of the marriage.
”The two parties have not reached a deal to renew the agreements that is consistent with Blizzard’s operating principles and commitments to players and employees, and the agreements are set to expire in January 2023,” said Blizzard.
The decision came at a time when a silver lining appears in China’s gaming industry, which has been hit with heavy handed regulations over the last few years. China’s state media outlet People’s Daily published an op-ed this week titled “the opportunity in the gaming industry cannot be missed,” sending Chinese game stocks surging.
But Blizzard isn’t giving up on China. “We’re immensely grateful for the passion our Chinese community has shown throughout the nearly 20 years we’ve been bringing our games to China through NetEase and other partners,” said Mike Ybarra, president of Blizzard Entertainment.
“Their enthusiasm and creativity inspire us, and we are looking for alternatives to bring our games back to players in the future.”
The termination of the partnership seems to have limited impact on NetEase’s bottom line. The firm said in a statement that “the net revenues and net income contribution from these licensed Blizzard games represented low single digits asa percentage of NetEase’s totalnet revenues and net income in 2021 and in the first nine months of 2022.”
Interestingly, NetEase also had this to say: “We hold high regard in our product and operational standards and abide by our commitments to Chinese players.”
Is NetEase hinting at its dissatisfaction with how Blizzard operates in China? In any case, the divorce doesn’t sound like an amicable one.
Blizzard ends 14-year licensing deal with NetEase in China by Rita Liao originally published on TechCrunch