Sony’s gaming subsidiary, Sony Interactive Entertainment, entered the lobbying world late last year expressing concerns about competition in the video game industry pending Microsoft’s $69 billion acquisition of gaming developer Activision Blizzard — the biggest gaming deal in history.
Sony Interactive Entertainment reported lobbying Congress for the first time in the fourth quarter of 2022, spending $60,000 to influence policy. It spent an additional $240,000 in the first half of 2023 lobbying federal lawmakers, the Department of Commerce and the U.S. Trade Representative in support of antitrust law enforcement, according to the company’s lobbying disclosures.
Activision Blizzard ramped up its typical lobbying activity this year, hiring a firm that reported lobbying Congress on “gaming competition” last quarter as well as the “adjudication of workforce issues.” The game publisher increased its total number of lobbyists from seven in 2022 to 16 in 2023, and 88% of the lobbyists it hired in 2023 were “revolving door” former federal employees.
After pausing its lobbying in 2020, Activision Blizzard steadily increased its lobbying each quarter since the first three months of 2022, when Microsoft announced the acquisition. Lawmakers asked the Federal Trade Commission in March 2022 to investigate how the merger would affect Activision Blizzard’s workers, as it had just settled a U.S. Equal Employment Opportunity Commission lawsuit alleging gender-based harassment and discrimination for $18 million.
Activision Blizzard spent $420,000 on lobbying in the first six months of 2023, which is on track to outpace its 2022 spending. Throughout 2022, Activision Blizzard spent $520,000 on federal lobbying, mostly on bills that aimed to make the U.S. technology sector more competitive with China. In the first half of 2023, the game publisher paid to lobby federal lawmakers on labor policy as well as the Executive Office of the President about the Equal Employment Opportunity Commission.
Microsoft, producer of Xbox gaming consoles and exclusive owner of the Halo series, has lobbied heavily on antitrust and competition issues this year. Microsoft reported spending $4.5 million on federal lobbying in the first six months of 2023, after spending $4.8 million in the last six months of 2022, excluding subsidiary LinkedIn’s lobbying expenditures. Microsoft is the third-biggest spender within the electronics manufacturing and equipment industry, after Oracle Corporation and Apple.
Activision Blizzard CEO Bobby Kotick told Fox Business on July 19 that the federal court’s refusal to stop the acquisition shows “the law is on our side for this transaction,” adding “Sony and Nintendo don’t need protection from the American Federal Trade Commission.”
The companies have cleared all remaining U.S. regulatory hurdles, but agencies abroad have held up the deal. To make time to resolve outstanding international regulatory concerns, the companies extended the deal’s deadline from July to October.
On Aug. 7, the New Zealand Commerce Commission approved Microsoft‘s proposed acquisition of Activision, leaving Australia and the United Kingdom as the final holdouts.
The U.K.’s Competition and Markets Authority released a February report that expressed concerns the acquisition could lead to fewer choices and higher prices for gamers. Sony told the agency in March it would lose revenue in subscriptions and PlayStation console purchases if Microsoft made Call of Duty exclusive to Xbox.
But the agency’s March 24 report stated that, with new data provided by acquisition parties and industry third parties, it found Microsoft would face significant financial losses if it made that decision. Sony said the agency’s reversal was “surprising, unprecedented and irrational.”
The U.K. agency also cited the fact Microsoft had not made previous acquisitions, like Minecraft, exclusive to Xbox consoles, to argue that the merger was not as dangerous to console competition as it previously thought. The agency announced it would continue investigating the acquisition’s effects on competition in the emerging cloud-gaming market and blocked the deal on those grounds in April.
After the European Union approved the merger in May, and U.S. federal courts rejected the FTC’s request to stop the deal in July, the U.K. agency opened up comments again about the merger. Microsoft asked the agency July 31 for the agency to reconsider the decision, stating it had reached a 10-year deal with Sony, “the principal opponent of the transaction,” to keep Call of Duty games available on PlayStation consoles, in addition to reaching licensing agreements with various cloud-gaming services.
Editorial and Investigations Manager Anna Massoglia contributed to this report.
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