New York State In-depth

Microsoft’s Union Ally urges FTC to merge deal with Activision (1)

Newfound support from Microsoft Corp. for organized labor has given the company a powerful ally that is pushing the US Federal Trade Commission for a deal to enable the software company’s $69 billion acquisition of Activision Blizzard Inc.

The Communications Workers of America have sided with one of the biggest tech companies after Microsoft announced it would recognize workers who choose to organize at video game maker Activision. The union, which represents nearly half a million workers in the telecoms, media, education and technology sectors, has publicly hailed the deal as a breakthrough in an industry hostile to unionized labour.

CWA chief of staff Jody Calemine said Microsoft’s labor neutrality agreement sets a precedent for companies seeking mergers — and should be recognized by the Biden administration, which proudly presents itself as pro-union. Calemine said the FTC’s decision last month to block the merger was “a huge missed opportunity to really give workers a seat at the table when it comes to mergers and acquisitions.”

“We hope that eventually the FTC will find a way to settle their differences with Microsoft over this transaction,” Calemine said in an interview. “Maybe there’s still a chance that could happen, that they would sort this out and the acquisition would finally go through.”

Finding an agreement is a long way off with an FTC whose Chair, Lina Khan, has publicly said she has no interest in alleged monopolies that promise to be good monopolies. FTC attorney James Weingarten told a judge Tuesday that the agency is “always open to any proposed settlement” but that “there are no substantive discussions” with Microsoft at this time.

Microsoft, maker of the Xbox console, has tried to address complaints from competitor Sony Group Corp. by promising to make Activision’s Call of Duty game available on Sony’s PlayStation for 10 years. However, a person familiar with the FTC’s case said the pledge does little to address the deal’s allegedly anti-competitive nature in all relevant markets, including mobile and cloud gaming spaces, which are new to the industry set limits.

FTC spokesman Peter Kaplan deferred to the agency’s public statements. A Microsoft spokesman also referred to the company’s public statements.

The FTC’s Dec. 8 complaint against the Microsoft-Activision deal was disappointing for union officials, particularly after CWA head Chris Shelton met with Khan in October to urge them to go ahead with the merger. Khan was otherwise a vocal supporter of organized labor. In September, she told Congress the FTC has “a legal obligation to ensure that we use our tools and agencies to address unfair competitive practices that affect workers.”

One of those tools is the agency’s regulatory powers, including a proposal Thursday that would ban companies from using non-compete covenants, which the FTC says limit worker mobility and depress wages. Earlier this week, the FTC ordered three companies and two individuals to stop enforcing non-compete agreements.

While the CWA welcomed the proposed rule Thursday, the group said union representation is the best way to improve wages and working conditions. Beth Allen, a CWA spokeswoman, said the FTC “could have significant impact on corporate control of our economy, our democracy, and our working lives” by considering employers’ positions on unionization, “if they understand the impact.” assessing mergers or exercising their other enforcement powers.”

Fusion harms

Brian Callaci, chief economist at the Open Markets Institute, an anti-monopoly organization, said the FTC’s rulemaking and enforcement efforts are separate from merger reviews like the Microsoft-Activision deal.

The FTC “makes no mention of the labor market in its complaint, so the downside to the merger goes to the consumer side,” Callaci said, adding that an offer to address workers’ concerns shouldn’t offset the downside to consumers. “This was not a labor market merger. This was a convenience store merger.”

Microsoft denied the FTC’s claims in a December 22 filing, arguing that consumers would benefit from multiple ways of accessing popular games. The company said making sure Activision games are widely available is “both good business and good for gamers,” highlighting the promise to Sony regarding Call of Duty.

Microsoft President Brad Smith told investors last month that while he is confident in his case before the FTC Administrative Judge, the company is committed to “offering constructive steps to address concerns from antitrust regulators and competitors.”

“We will meet with Sony anytime because our only concern is finding solutions,” Smith said on the Dec. 13 conference call. He also vowed to “continue to meet with regulators in other parts of the world” while European authorities review the deal.

The European Commission should decide on the merger by mid-April. The UK Competition and Markets Authority is expected to issue a preliminary report in the next few weeks with a final decision by April 26th. The CMA said three-quarters of the more than 2,000 public comments it received supported the merger.

Activision opposition

The tech industry has fought union organizing efforts in the past, including Activision’s opposition to organizing workers at two of its studios. The National Labor Relations Board found in October that Activision withheld pay increases from quality assurance workers who voted to organize at Raven Software’s Wisconsin studio, which makes Call of Duty. Activision also resisted efforts to organize at its Blizzard Studio in Albany, New York.

A third studio, the 57-strong Boston-based proletariat unit of designers, animators, engineers, producers and quality assurance staff, said last week it will seek to form a union. All three union efforts are backed by CWA.

In June — the week before Microsoft announced its labor neutrality agreement with CWA regarding the Activision deal — Smith pledged to work constructively with Microsoft’s own employees who choose to organize.

About 300 ZeniMax Studios workers were the first to accept the offer this week, voting to form a union at the Bethesda, Maryland-based studio. A Microsoft spokesman said the company looks forward to “negotiating in good faith as we work toward a collective bargaining agreement.”

(Updates with comment from CWA in 10th paragraph)

To contact the reporter on this story:
Anna Edgerton in Washington at [email protected]

To contact the editors responsible for this story:
Sara Forden at [email protected]

Jon Morgan, Magan Crane

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