Microsoft hopes to close Activision deal through ‘nice guy’ strategy

December 23, 2022
Microsoft Brad Smith

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President Brad Smith made it clear in a recent interview that Microsoft is taking a different path to close the $69 billion Activision deal. Unlike in the past, the software giant is now trying to make peace with its rivals and regulators to prove that it means no harm in the market competition. As Smith put it, the company still hopes its “nice guy” strategy could help close the merger. (via The New York Times)

In the interview, Smith recalled Federal Trade Commission Chair Lina Khan’s reaction when presented with the concession to soothe concerns. “She did not take me up on my offer, but when I said give peace a chance, she smiled at least a little,” Smith said. “So any time somebody can end a meeting by smiling even a little, there’s always a little hope that we can sit down together in the future.”

However, things are very different now, with the FTC fully serious about blocking the merger. Smith recounted the time the agency’s staff met the company’s team.

“Our team asked, ‘Could we discuss a settlement proposal?’ And the staff said, ‘Not with us,'” he detailed. Ironically, FTC’s Bureau of Competition Director Holly Vedova said the US agency is always open to proposals from companies that want to resolve antitrust issues.

Currently, the deal is being scrutinized by different regulators, especially those from Britain and the European Union. The FTC took a step forward recently by filing a complaint, expressing its utter approval for the merger. Recalling its statements, the agency claimed that Microsoft assured the European Commission about keeping ZeniMax titles available to competitors after clearing the ZeniMax Media acquisition. However, the EU denied everything and clarified that Microsoft didn’t make such “commitments.”

Despite possibly getting its perspective wounded by the EU’s statement, FTC is still determined to keep the case filed in the administrative court. Now, the deal’s future greatly relies on the decision of the other regulators. If Microsoft gets support from other competition watchdogs, the FTC might file an injunction in federal court. However, even in this case, the odds are still in Microsoft’s favor. Also, this week, UK’s Competition and Markets Authority revealed that 75% of the public supports the deal based on the responses it received.

Both the US agency and Microsoft have their own huge reasons for winning the case filed by the former. However, the software giant’s victory might mean more as it will also benefit other tech companies who would like to make big-time acquisitions in the future. By winning against FTC, Microsoft might pave the way for others in the industry, which is now being greatly regulated by competition watchdogs.

On the other hand, while Microsoft stands as a fighter in handling court battles, its approach toward competition now directly reflects Smith’s so-called “nice guy” strategy. Aside from offering consistently stressing that the deal’s target is to promote competition, Microsoft also provided concessions to its rivals (by handing Nintendo a 10-year licensing agreement for Call of Duty and offering Sony the same) and even promised to stay neutral in case Activision employees decided to unionize after the acquisition.

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