Thread by American Economic Liberties Project
- Tweet
- Dec 6, 2022
- #BigTech
Thread
Yesterday, Microsoft exec Brad Smith published an op-ed in the WSJ in support of Microsoft’s acquisition of Activision. He says corporate consolidation will be good for everyone.
Here are some important facts about the merger, which @FTC may block.🧵⬇️ www.wsj.com/articles/microsofts-activision-blizzard-acquisition-is-good-for-gamers-competition-sony-c...
Here are some important facts about the merger, which @FTC may block.🧵⬇️ www.wsj.com/articles/microsofts-activision-blizzard-acquisition-is-good-for-gamers-competition-sony-c...
2/ Microsoft — a $2 trillion company that owns Xbox — is seeking to acquire rival game developer Activision Blizzard for $69 billion.
That’d be the largest acquisition this year in any industry, and the largest tech acquisition in history. www.cnbc.com/2022/01/18/biggest-tech-deal-ever-microsoft-activision-set-69-billion-record.html
That’d be the largest acquisition this year in any industry, and the largest tech acquisition in history. www.cnbc.com/2022/01/18/biggest-tech-deal-ever-microsoft-activision-set-69-billion-record.html
3/ It’s a merger between direct competitors in a concentrated industry.
Through Xbox gaming, Microsoft is the third largest game developer globally, behind its main competitor Sony, and Tencent, a Chinese mobile app developer it does not compete with. www.gamespot.com/articles/playstation-xbox-and-nintendo-gaming-revenue-compared-sony-leads-the-way/11...
Through Xbox gaming, Microsoft is the third largest game developer globally, behind its main competitor Sony, and Tencent, a Chinese mobile app developer it does not compete with. www.gamespot.com/articles/playstation-xbox-and-nintendo-gaming-revenue-compared-sony-leads-the-way/11...
4/ Microsoft already owns ~30 gaming studios. Revenue for Xbox gaming, excluding hardware, was $12.5B in 2021.
Activision Blizzard is a similar size in this market, with revenue of $9 billion in 2021. It acquired around 25 studios since the 1990s. This is a merger of mergers.
Activision Blizzard is a similar size in this market, with revenue of $9 billion in 2021. It acquired around 25 studios since the 1990s. This is a merger of mergers.
5/ So what? Well, Microsoft’s acquisition of Activision gives it leverage to advantage itself over other consoles.
Here’s how: It has what’s called a Game Pass system, which is like a Netflix for games. One subscription, unlimited games. We’ve seen this before.
Here’s how: It has what’s called a Game Pass system, which is like a Netflix for games. One subscription, unlimited games. We’ve seen this before.
6/ Game Pass loses money, but is subsidized by Microsoft’s overall profitability. Why? So the company can push competitors out of the market.
This is called predatory pricing, and it’s the Netflix model Microsoft President Brad Smith celebrated today. www.gamespot.com/articles/xbox-game-pass-is-not-a-big-moneymaker-right-now-b/1100-6480241/
This is called predatory pricing, and it’s the Netflix model Microsoft President Brad Smith celebrated today. www.gamespot.com/articles/xbox-game-pass-is-not-a-big-moneymaker-right-now-b/1100-6480241/
7/ If Microsoft buys Activision, it will control ‘must-have’ video game content, like Call of Duty, Overwatch, Hearthstone, and World of Warcraft. It can withhold these titles, and others, from rival services.
The goal is to get gamers and studios to rely on Game Pass.
The goal is to get gamers and studios to rely on Game Pass.
8/ How do we know? Well Smith is offering a concession as part of the merger. Microsoft will treat people well once it has a “cloud-based game store” monopoly. But why let it have a monopoly in the first place? 
9/ Smith is making a good point here. We should pass this legislation and break up the monopolies that Apple and Google have over phone app stores (including games).
But it’s not a reason to let Microsoft create a new app store monopoly.
But it’s not a reason to let Microsoft create a new app store monopoly.
10/ Notice what’s happening in Hollywood, with five big streaming services and walled gardens everywhere.
It’s a highly concentrated system with bad terms for creators, layoffs, and price hikes from Disney/Netflix. www.wga.org/news-events/news/press/writers-guild-of-america-west-releases-new-report-examining-the-ha...
It’s a highly concentrated system with bad terms for creators, layoffs, and price hikes from Disney/Netflix. www.wga.org/news-events/news/press/writers-guild-of-america-west-releases-new-report-examining-the-ha...
11/ This is what Microsoft is aiming for. Control of an industry. No more independent studios. More power over advertising and data. The goal is to consolidate video gaming the way that Hollywood has consolidated TV and movies.
Long-term, it’s bad for gamers and creators.
Long-term, it’s bad for gamers and creators.
12/ In March, we joined other civil society organizations, including @Public_Citizen, @DemandProgress, @OpenMarkets, @PublicKnowledge, and @CWAUnion, in laying out a broad range of harms, including these, and asked the FTC to scrutinize the deal. www.citizen.org/article/microsofts-activision-blizzard/
13/ CWA now supports this merger because Microsoft has agreed to let unions organize Activision workers if it goes through. And union organizing is a good thing.
But as with Hollywood and streaming, consolidation will ruin video gaming. thehill.com/opinion/technology/3762122-for-once-the-ftc-is-considering-a-merger-that-helps-the-worker...
But as with Hollywood and streaming, consolidation will ruin video gaming. thehill.com/opinion/technology/3762122-for-once-the-ftc-is-considering-a-merger-that-helps-the-worker...
14/14 This merger is unlawful under the antitrust laws and the concerns in our original letter still stand. There are no good private monopolies.
A concentration of power like this is simply too dangerous.
A concentration of power like this is simply too dangerous.
