Microsoft’s $69bn acquisition of Activision Blizzard shows that content is merely Big Tech’s edible plaything.

Activision Blizzard CEO, Bobby Kotick (pictured) took home a $155 million payday in 2020, partly driven by a surge in company value caused by people playing video games during pandemic lockdown

MBW Reacts is a series of analytical articles from Music Business Worldwide written in response to major recent entertainment events or news stories. 

“The DSPs – tech titans like Spotify, Apple, Amazon and Google – are unavoidable trading partners that exercise considerable bargaining power. [Sony Music‘s] terms have for several years deteriorated in their favour.”

So went Sony Music’s submission to the UK’s competition watchdog the other month.

In an uncharacteristic move, the world’s second biggest music rights company set out to prove its lack of market power, all for the purpose of getting the green light to buy AWAL.

But there was something sincere in Sony‘s fear of said “tech titans” that resonated far beyond its attempt to buy AWAL, and far beyond the music business itself.

It was a truthful indication that Big Tech’s most massive corporations hold the various content industries in the palm of their hands, poking and prodding at them until they’re shaped to their liking; before, ultimately, swallowing them whole.

This narrative got a sparkling new chapter today (January 18) when Microsoft (current market cap: $2.30 trillion) announced that it’s buying video games giant Activision Blizzard for the shocking price-tag of USD $68.7 billion.

The music business, myself included, can be a little guilty of forgetting where the boundaries of the tech-content complex actually begin and end. We sometimes like to pretend in our own bad-tempered enclave that Universal Music Group really is as big as it gets.

So let’s swiftly put Activision Blizzard’s monstrous acquisition price into context: USD $68.7 billion is more than the current market cap values of Universal Music Group (USD $46bn) and Warner Music Group (USD $20.4bn) combined.

What does Microsoft want with Activision Blizzard, home to franchises such as Call Of Duty, Overwatch, Candy Crush and Warcraft?

In its official announcement of the deal, Microsoft said the acquisition would “accelerate the growth in Microsoft’s gaming business across mobile, PC, console and cloud and will provide building blocks for the metaverse”.

Even those with a passing knowledge of the gaming industry will know that Microsoft owns the Xbox console brand – and possibly also know that its latest console range, Xbox Series X and Series S, has fallen significantly behind the global sales of key rival PlayStation 5.

With Activision Blizzard in its tent, could Microsoft force Call Of Duty onto Xbox as a console exclusive, severing PlayStation’s association with the blockbuster CoD brand?

Likely not: Microsoft’s announcement insists that, subsequent to the buyout, it’s determined to “bring the joy and community of gaming to everyone, across every device”.

There will, though, be some exclusive perks: Xbox’s gaming equivalent of Netflix, Game Pass, sees users pay a monthly subscription price for access to a wide selection of (mainly catalog) games.

Microsoft now has “plans to launch Activision Blizzard games into Game Pass, which has reached a new milestone of over 25 million subscribers”.

Does this acquisition offer anything in the tea leaves for the music industry? Perhaps.

If nothing else, it is a reminder that when a Big Tech titan makes the decision to acquire a content business (especially one that prospectively locks out its rivals from entertainment enjoyed by masses of consumers) it will stop at little to execute a buyout.

In this context, it’s not unfeasible to imagine a Microsoft, or an Apple, or a Netflix, or even an Amazon, swooping for Universal Music Group at some point in the future.

Impossible? Well, the Activision Blizzard deal shows Big Tech is not averse to buying a publicly-traded company when the conditions are right.

Plus, there are a fair few eerie similarities between UMG and Activision Blizzard today:

The similarities sharply stop, however, when it comes to company culture: Activision Blizzard has been best known in the business pages of late due to a string of ugly workplace scandals.

Employees  at the firm staged a walkout in November after the Wall Street Journal reported that CEO Bobby Kotick “knew for years” about internal sexual misconduct allegations leveled at senior staff members, including at least one allegation of rape.

In July last year, the California Department of Fair Employment and Housing (DFEH) sued Activision Blizzard, alleging that the company had ignored multiple complaints by female employees. It cited a “frat boy” culture at the games maker.

(One of the DFEH’s most damaging allegations, reports the WSJ, was that a female staff member killed herself after a photo of her vagina was circulated at a company party.)

And then there’s the allegation that, in 2006, Bobby Kotick personally threatened to have one of his assistants killed in a recorded voice memo.

A modern-day Activision spokesperson said of that doozy: “Mr. Kotick quickly apologized 16 years ago for the obviously hyperbolic and inappropriate voice mail, and he deeply regrets the exaggeration and tone in his voice mail to this day.”


Evidently, Microsoft feels it can look past such indiscretions, and welcome Activision Blizzard into its corporate bosom with no misgivings. Rather them than us.

Heinous levels of workplace wrongdoing aside, Microsoft’s $68.7 billion acquisition of Activision Blizzard has got me thinking about a rapidly-ageing music biz revelation that I, with some justification, just can’t bring myself to forget.

At Midem in Cannes in summer 2016, industry legal supremo Joel Katz confirmed that Google (now Alphabet) had made inquiries about acquiring the Michael Jackson Estate’s 50% stake in the company then known as Sony/ATV (now Sony Music Publishing).

That stake was eventually sold to Sony in a $750 million deal in March 2016.

Commented Katz: “It would have been a very interesting proposition, with [Google] having a major interest in a major publishing company like that, negotiating their licenses with the record companies and saying: ‘Hey, we don’t have to license you!’”

You can understand, then, why Sony has every right to be wary, nay even suspicious, of Big Tech’s colossal market power, and of how Big Tech might choose to wield that power in future.

As the Activision Blizzard buyout shows, music’s “unavoidable trading partners” with their “considerable bargaining power” are constantly getting bigger, stronger… and much, much hungrier.Music Business Worldwide

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