While much of the attention being paid to Microsoft this week is justifiably focused on the addition of an OpenAI-powered chatbot to its Bing search engine—check out must-read takes on that from my colleagues Alexei Oreskovic and Jeremy Kahn—there’s also action underway regarding the company’s record-breaking, $69 billion takeover of games publisher Activision Blizzard.
The U.K.’s antitrust regulator, the Competition and Markets Authority (CMA), today laid out what it sees as blockers to the deal’s completion. The CMA thinks Microsoft would unjustly benefit from being able to make Activision games exclusive to its own Game Pass cloud gaming service and would get an even stronger position in that sector, of which it already has a 60% to 70% market share. The watchdog also warned that Microsoft could use Call of Duty exclusivity to boost Xbox console sales and harm Sony’s rival PlayStation platform. In short, gamers would suffer from reduced competition.
So far, so familiar. This is pretty much what the U.S. Federal Trade Commission (FTC) complained about when it sued to block the deal in December, and what the European Commission reportedly laid out in a “statement of objections” (a kind of European antitrust charge sheet) a week ago.
However, the British regulator has gone a step further, by proposing potential solutions (or “remedies” in antitrust-speak) to the problems it identified. The CMA indicated it would prefer so-called structural remedies in this case, meaning a breakup. Microsoft might have to get rid of part of the Activision Blizzard business—either Call of Duty specifically, or the wider Activision unit, or the Activision and Blizzard units together (which would leave Candy Crush–maker King, along with the e-sports and motion-picture units). Or the CMA could just block the merger wholesale.
None of that sounds terribly appetizing for Microsoft. However, it would be a mistake to see today’s developments as necessarily being the death of the deal.
For one thing, remedy notices like these are supposed to be, in the CMA’s words, “a starting point for discussion” with Microsoft, Activision Blizzard, and their customers and competitors. The authority is open to comments for the next two weeks—its final decision is due late April—and it says it will opt for “the least costly and intrusive remedy that it considers to be effective.”
Neither Microsoft nor Activision Blizzard has actually proposed its own remedies, the CMA added. That’s not quite how Microsoft sees it—the tech giant has been loudly touting the fact that it’s committed to granting competitors a decade’s worth of “100% equal access” to Call of Duty titles, and today Microsoft’s deputy general counsel Rima Alaily insisted that this would “address the CMA’s concerns.”
“When we say equal, we mean equal,” Alaily said in an emailed statement. “Ten years of parity. On content. On pricing. On features. On quality. On playability.”
The British regulator is not oblivious to Microsoft’s argument, and, while it doesn’t think this sort of “behavioral” commitment can be the primary solution, it said it will also consider it as “a possible remedy.” So, stay tuned.
A final word regarding Activision Blizzard CEO Bobby Kotick’s media tour just ahead of the CMA’s provisional decision: I’m not sure it’s the smartest thing to accuse the regulator you’re trying to charm of “being co-opted by the FTC ideology and not really using independent thought,” or to claim—after they’ve just spent five months polling the industry and reviewing millions of internal Microsoft and Activision documents—that they’re “confused.”
So far, the CMA is the only one of the big antitrust regulators to suggest a way through this. Especially as it’s extremely tricky to appeal a CMA divestiture decision—just ask Meta—playing nice might be the better option.
Want to send thoughts or suggestions to Data Sheet? Drop me a line here.
Data Sheet’s daily news section was written and curated by Andrea Guzman.
A chat with A.I.-powered Bing. Journalists and analysts got a first look at the revamped Bing during Microsoft’s A.I. search event Tuesday. The new search engine provides conversational answers to questions and is the result of a collaboration between Microsoft and OpenAI, the startup behind ChatGPT. While impressively planning a three-day trip to New Orleans, it also has some faults that bring into question how it’s quicker or improved from a traditional search. Fortune’s takeaways from the event look at costs, Google’s race to compete, and more.
Sophomore slump or comeback of the year? People flocked to the social media platform Mastodon after Elon Musk took over Twitter last October, getting the platform to 2.5 million monthly active users. But by late January, the monthly user count stood at 1.4 million. Wired reports users may return to the Twitter foe after Twitter announced it would no longer support third-party apps and start charging fees to use its API. Mastodon isn’t the only social platform facing a challenge. Downloads of BeReal were falling at the end of last year, and worldwide monthly average users growth saw a slowdown in December.
Layoffs hit Zoom. The videoconferencing company is slashing 1,300 jobs, CEO Eric Yuan announced yesterday. This comes after the company tripled its headcount over two years, a move that Yuan said came with less time to gauge whether the growth was sustainable. Now, 15% of Zoom’s workers will lose their jobs, while Yuan said he’s forgoing his bonus and reducing his salary. It’s the latest in a string of tech layoff announcements. Earlier this week, Dell announced cuts, joining other tech giants like Amazon and Google.
Tech lobbyists cozied up to Hochul. New York’s right-to-repair bill saw a few changes before it was signed by New York Gov. Kathy Hochul, such as lower access to parts and limiting fixable devices to those built after mid-2023. The changes are the same as those proposed by TechNet, a trade association with members like Apple, Google, Samsung, and HP. In the months leading up to Hochul signing the bill, she had frequent meetings with TechNet, reporting by Grist and The Markup shows. TechNet told the publications that earlier versions of the bill presented risks to data privacy and safety, though the FTC has said there’s little evidence to support that claim.
FOOD FOR THOUGHT
She was the blueprint. Claire Hughes Johnson, a former Google vice president, built an instruction manual on how she works so that her team could get the most from her. When she joined Stripe, she encouraged new hires to write one, too. The practice of building this guide inspired her new book, Scaling People. She talked with Fortune about how her book can help with personal growth and make your preferences known in the workplace.
From the article:
The aim of this exercise is to make an “implicit set of preferences explicit to people,” Johnson adds. This can get really granular, even to the point of detailing how long it takes you to review documents or whether you don’t like to be contacted on your personal number.
IN CASE YOU MISSED IT
The economist who predicted that A.I. would replace half of all U.S. jobs now says ChatGPT is the equivalent of Uber disrupting the taxi industry—and it could lead to lower wages, by Prarthana Prakash
Inflation is taking a toll on America’s 401(k)s and retirement plans, by Megan Leonhardt
CEOs say they’re afraid of a recession but nearly 70% plan to hire more people this year anyway, by Will Daniel
Former Coinbase employee accepts plea deal, admits to insider trading, by Ben Weiss
Harry Potter game branded a ‘genocide simulator’ attracts record interest after boycott backfires, by Christiaan Hetzner
The deadly legacy of unemployment: Lack of jobs is one of the biggest drivers of terrorism and extremism, UN says, by Tristan Bove
We asked ChatGPT which jobs it thinks it will replace—and it’s not good news for data entry professionals or reporters, by Eleanor Pringle
BEFORE YOU GO
Coping with aftershocks. Laid-off workers are using social media to get support and navigate unemployment. Some are using TikTok to show their life before and after layoffs. And ex-Googlers have banded together on a Discord server where they’re sharing advice on severance and setting up mock interviews to help one another find their next job. “It gave us a way to at least communicate with our teams, but also each other, to figure things out and to have some connection,” a former Google worker told Insider.
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