David McCabe reports on tech policy from Washington, and Karen Weise reports on Microsoft from Seattle.
In recent weeks, Microsoft has accused Sony, its chief video game rival, of misleading regulators. Its lawyers have showed off game consoles, including
an Xbox, to British officials. And the president of a major union that Microsoft
wooedhas 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 dealsince 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, this 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 F.T.C. 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 tech giants can navigate the new environment, said William E. Kovacic, a former F.T.C. chairman. "It's a fundamental test," he said.