had been working for close to a year to calm regulators’ concerns about its acquisition of videogame developer
Activision Blizzard Inc.,
but the Federal Trade Commission’s suit to block the deal raised doubts about the company’s pledge not to shut out rivals.
The FTC this week took one of its biggest swings ever against a big technology company and sued to stop the planned $75 billion acquisition, setting the stage for a court challenge over a deal the antitrust agency said would harm competition.
The commission’s complaint said the deal is illegal because it would give Microsoft the ability to control how consumers beyond users of its own Xbox consoles and subscription services access Activision’s games. Microsoft has repeatedly said it wouldn’t engage in such actions. The FTC’s complaint accused Microsoft of reneging on a similar pledge to a European regulator in the past, a criticism the company disputes.
Earlier this week, as the possibility of a lawsuit grew, Microsoft touted the deal’s benefits to gamers through an op-ed article in The Wall Street Journal and announced an agreement to give a competitor access to one of Activision’s most popular games. The FTC filed its lawsuit on Thursday.
“The Proposed Acquisition, if consummated, may lessen competition substantially or tend to create a monopoly,” the FTC said in its complaint against Microsoft.
Executives at the Redmond, Wash., company have said it would take a long time to get all the approvals needed from regulators around the world, and it had given itself close to 18 months for the process. The deal could now miss Microsoft’s mid-2023 deadline, and some analysts said Microsoft might want to drop the acquisition.
Microsoft should “take the hint and give up the deal that, if completed, might end up a Pyrrhic victory of executive distraction and expensive regulatory concessions,” John Freeman, vice president at investment-research firm CFRA Research, wrote in a note to investors.
At stake is Microsoft’s big ambitions for its videogaming business, which had revenue of $16 billion in the company’s last fiscal year. That total represents less than 10% of Microsoft’s overall revenue. The business is a crucial part of Microsoft’s plans to diversify to attract more noncorporate customers.
The FTC’s move came after the company had avoided the brunt of the anti-tech backlash of recent years.
The suit represents a “somewhat meaningful setback” for Microsoft because of the company’s longtime lobbying efforts, said Stifel Nicolaus analyst Brad Reback. “They’ve worked very hard to stay on the right side of government agencies.”
Microsoft’s representative in Washington—its vice chairman and president,
—has been building relationships in the capital for decades. He had helped cultivate an image of the software giant as one of the friendly technology leaders, an enviable position in a regulatory environment that has been increasingly hostile toward tech titans.
One of the longest-serving leaders inside Microsoft, Mr. Smith joined the company in 1993 and was a legal adviser through its bitter antitrust disputes with regulators worldwide in the 1990s.
“We have been committed since Day One to addressing competition concerns, including by offering earlier this week proposed concessions to the FTC,” Mr. Smith said after the lawsuit was filed. “While we believed in giving peace a chance, we have complete confidence in our case and welcome the opportunity to present our case in court.”
In its complaint, the FTC accused Microsoft of previously suppressing competition from rivals through its 2021 acquisition of ZeniMax Media Inc., parent of “Doom” developer Bethesda Softworks, despite giving assurances to European antitrust authorities that it would do otherwise. Microsoft said the FTC’s ZeniMax allegation is misinformed.
Microsoft officials have expressed confidence in closing the Activision deal, which it has valued at $68.7 billion after adjusting for Activision’s net cash. Lawmakers and industry representatives have said it would be hard for any of the biggest U.S. tech companies—including
owner Meta Platforms Inc.—to win approval for a large acquisition in the current political environment.
In recent years, as government scrutiny and competition between the biggest tech companies have been increasing, Microsoft has tried to appease regulators.
For example, in May, Microsoft announced a set of principles it would abide by when dealing with cloud-service providers in Europe, hoping to assuage concerns its cloud business was hurting European cloud companies. The principles included pledges to work with European cloud providers and support the success of software vendors running on Microsoft’s cloud.
Amid concern the deal could hurt attempts to unionize at Activision or elsewhere in the gaming industry, Microsoft in June said it was open to working with any labor unions that want to organize.
As PlayStation maker
Sony Group Corp.
and others said they were concerned the acquisition could leave competitors locked out of Activision’s popular “Call of Duty” franchise, Microsoft this week said it would make it available for the first time on Nintendo Co.’s Switch gaming consoles for at least 10 years.
Microsoft this week also made its case to the public. “Blocking our acquisition would make the gaming industry less competitive and gamers worse off,” Mr. Smith, wrote in the Monday op-ed article in the Journal. “Think about how much better it is to stream a movie from your couch than drive to Blockbuster. We want to bring the same sort of innovation to the videogame industry.”
It is too soon to tell whether the FTC can succeed in blocking the acquisition. The agency likely will have to go before a federal judge, a process that could take months to unfold, said Eric Talley, a professor at Columbia Law School.
The case could be difficult for the regulator to win because courts have traditionally not seen deals among companies that specialize in different phases of the same industry’s production process—so-called vertical mergers—as competitive dangers, he said.
“It may require the commission to convince a judge to change the law somewhat,” he said. “That makes it a difficult case for the FTC to win, though they presumably knew this going in.”
Write to Sarah E. Needleman at Sarah.Needleman@wsj.com
New HomePod Reviews Offer Hands-On Look at Sound Quality, Siri, and More
Apple’s second-generation HomePod will start arriving to customers and launch in stores this Friday. Ahead of time, the first reviews of the smart speaker have been shared by select media publications and YouTube channels.
Priced at $299, the new HomePod features a virtually identical design as the full-size HomePod that Apple discontinued in March 2021, but with two fewer tweeters and microphones. The Siri-powered speaker is also equipped with a four-inch high-excursion woofer, an S7 chip for computational audio, and a U1 chip for handing off music from an iPhone. The speaker supports Matter for smart home accessories and Spatial Audio with Dolby Atmos.
A new sensor in the HomePod can measure temperature and humidity in indoor environments, and this feature was also enabled on the existing HomePod mini with a recent software update. Sound Recognition will also be coming to the new HomePod with a software update this spring, allowing the speaker to listen for smoke and carbon monoxide alarms and send a notification to the user’s iPhone if a sound is identified.
The new HomePod can be pre-ordered on Apple’s online store, with white and midnight color options available. In-store availability and deliveries to customers will begin Friday, February 3 in the United States, Australia, Canada, China, France, Germany, Italy, Japan, Spain, the UK, and 11 other countries and regions.
The Verge‘s Chris Welch said sound quality is very similar to the original HomePod:
After several days of listening to the new HomePod (both solo and in a stereo pair), I still think its sound signature remains true to the original HomePod. If you were a fan of that speaker, you’ll be satisfied with the second-gen version. Sure, you can hear subtle differences in how music is rendered when comparing both generations side by side with the same track. The newer HomePod might bring out a guitar solo with slightly more emphasis than the original. But the central traits are the same.
The Wall Street Journal‘s Nicole Nguyen also said the new HomePod sounds the same as the original:
The updated HomePod looks a lot like its discontinued predecessor—and sounds similar, too. I tested the new HomePod, as a single unit and grouped as a stereo pair, in a room that’s roughly 370 square feet. For most tracks, keeping the volume at 30% was enough to fill the space.
If you look at spec sheets comparing the old and new HomePods, you might scratch your head. The new one has a fast processor but fewer built-in microphones and speakers, and supports an older Wi-Fi standard. But in person, the new HomePod sounds and performs the same as the original.
Pocket-lint‘s Britta O’Boyle was impressed with the new HomePod’s sound quality too:
In terms of hardware, there are five tweeters, a “high-excursion woofer” capable of moving an impressive 20mm, and a four-microphone array. It’s a slightly different setup to the original HomePod – that had seven tweeters for starters – but the performance is equally excellent. Make no mistake, the HomePod (2nd generation) sounds fantastic.
In the midrange, you get vocals that are detailed, crisp and crystal clear, while at the lower end, the HomePod packs in plenty of bass. It’s lovely and deep for its size, while still offering expression and punch. It’s not as bassy as the Sonos Five – which is a bigger and more expensive speaker – and HomePod is arguably a little more muddled in the mid-range when playing tracks like Skrillex’s Rumble compared to the Five, but it is still very impressive overall – and that is a pretty tricky track to keep up with anyway. You can reduce the bass in the Home app, though we didn’t find this necessary.
Engadget‘s Billy Steele said that while Siri had several shortcomings when the original HomePod was released in 2018, the voice assistant has improved over the years. He also said the new HomePod’s two fewer microphones compared to the original did not impact Siri’s ability to detect his voice — even in a noisy room:
When we reviewed the original HomePod in 2018, one of our biggest gripes was with Siri’s limited abilities. Sure the speaker sounded good, but the lack of polish with the voice assistant made it seem like a work in progress. Apple has done a lot to improve Siri over the last five years, so a lot of those issues with the original have been fixed.
First, the HomePod, like Siri on your iPhone, is capable of recognizing multiple users. Personal Requests can allow it to peek at your Calendar, Notes, Reminders, Messages, Find My and more when you ask. Plus, HomePod can give each member of your family (up to six people) their unique responses from certain iPhone apps. What’s more, Siri can create recurring home automations without you having to pick up your phone and swipe over to the appropriate app.
Even with fewer microphones to pick up your voice, the new HomePod doesn’t suffer any performance setbacks. It’s just as capable as ever at picking out your voice even in a noisy room.
MobileSyrup‘s Dean Daley was impressed with Spatial Audio on the new HomePod:
A fantastic song to test out spatial audio is also one of my favourite tracks for karaoke, “Bohemian Rhapsody” by Queen. It sounds decent at first, but after the “I see a little silhouette of a man” section of the song, the 2nd-Gen HomePod takes it to a whole other level, perfectly utilizing Dolby Atmos’ surround sound and spatial audio with harmonies and melodies to create an epic concert in the entertainment space. This was definitely my favourite song I tested out, and one I showed to several friends.
TheStreet‘s Jacob Krol touched on the new HomePod’s larger backlit touch surface:
The most significant design change lives up top and involves the screen. While there isn’t really new information being shown and the dream of a HomePod with a true display contains to be just that a dream, the top surface is larger. It gives one more control with tapping to play or pause among other controls and it can glow brighter, and larger in different colors.
Rather than having the volume controls appear after a touch like on the original HomePod, the “+” and “-” are now etched into this backlit touch surface which makes it easier to adjust the volume at a moment’s notice. When playing back music, the HomePod’s top will glow in colors that resemble the album artwork of what you’re listening to and when communicating with Siri it will glow with all of the colors you’d expect.
TechCrunch‘s Brian Heater tested audio handoff on the new HomePod:
Start a song with Apple Music on your iPhone, hold it near the HomePod and it will start playing there, accompanied by a satisfying haptic fist bump. Move the phone near the speaker again and you can transfer it back. I really like this feature. It’s a good example of how nicely hardware can play together if you make your own devices, software and chips. It’s also surprisingly receptive. In fact, I found myself having to disable it while the HomePods are on my desk, otherwise it will accidentally trigger when I’m using the iPhone two feet from the speakers.
Video Reviews and Unboxings
Facebook has secretly been draining your phone battery to test features, former Meta employee claims – Fortune
Facebook has been draining users’ phone batteries without their consent according to an ex-employee who claims they were fired for refusing to comply with the practice.
Facebook-parent Meta has been using “negative testing” for over five years, according to data scientist George Hayward, 33, who started working on the messenger app in October 2019.
In a now withdrawn lawsuit filed on Jan. 20, Hayward said he had seen an internal document titled “How to run thoughtful negative tests” which laid out details of the practice and examples leading back to 2016.
That document indicates that Meta has been using “negative tests” across its platforms, which have around 2.96 billion users according to recent reports. They are used to “measure impact” by testing new features, and by measuring how quickly the app runs, how images load and how news feed scrolls perform.
When asked to participate, Hayward said he refused out of concern for the risks involved in depleting users’ power, especially in cases when they have to communicate to others like the emergency services.
Hayward’s lawyer, Dan Kaiser, maintained that “negative testing” is not legal in New York, according to the New York Post, saying that it violates a law that prohibits damaging someone’s property without their consent.
“It’s clearly illegal,” Kaiser said. “It’s enraging that my phone, that the battery can be manipulated by anyone.”
“Negative testing” concerns shut down
The ex-employee said he doesn’t know how many people have been affected by the tests, but that when he expressed this to his supervisor at the time, his concerns were pushed to the side.
“It turns out if you tell your boss, ‘No, that’s illegal,’ it doesn’t go over very well,” Hayward told the New York Post.
“I said to the manager, ‘This can harm somebody,’ and she said by harming a few we can help the greater masses.”
According to the suit, Hayward noticed retaliation including low performance ratings, reviews that were canceled and then rescheduled, and the assignment of responsibilities that set him up for failure.
He was fired in November, which coincided with Meta’s recent mass layoffs. However, his lawyers argue that this was no coincidence.
The lawsuit, filed in Manhattan, has now been withdrawn due to Meta’s internal arbitration clause; however Hayward stands by his allegations, his lawyer told the Post.
A Meta spokesperson told Fortune: “Mr Hayward’s claims are without merit.”
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Report: Microsoft, Sony & Nintendo All Skipping E3 2023 – Kotaku
This was supposed to be the year, after industry setbacks and a global pandemic, that E3—once the brightest centre of the video game universe—came back “recognizably epic” as a live show for the first time since 2019. Reports today indicate, however, that it will be doing so without any of the console industry’s power players.
A story on IGN this evening says “all three of gaming’s first-party console manufacturers appear poised to skip E3’s big return”, meaning that for the first time in the live show’s history not a single one of them will be at an event that was traditionally their highlight of the whole damn year.
While this is a definitive final straw for E3, this has been coming for a while. Nintendo stopped holding big E3 press conferences ten years ago (though the company had a showroom floor presence at the last live show in 2019), and Microsoft and Bethesda recently pivoted to holding their own showcases alongside the E3 festivities. Sony also began passing on E3 stuff a few years back.
While Microsoft won’t be at any official E3 events, boss Phil Spencer says that, as they’ve done the last few years, Xbox will in 2023 be doing stuff alongside E3 so that any press and industry folks in town for that show will be around for theirs as well. It’s not known what Nintendo and Sony will be doing in E3’s stead, if anything, though Geoff Keighley’s rival Summer Games Fest will be taking place at roughly the same time.
It’s important to note here that this isn’t the same E3 as the olden days. Events specialists ReedPop took over planning of the show last year, and said:
For years, we’ve listened, heard, and studied the global gaming community’s feedback. E3 2023 will be recognizably epic—a return to form that honors what’s always worked—while reshaping what didn’t and setting a new benchmark for video game expos in 2023 and beyond.
How they’re going to be “recognizably epic” without any major platform holder in attendance is anyone’s guess, though ReedPop did say in a statement to IGN that:
As we spent much of 2022 refining how E3 2023 would take shape, reflecting on the feedback we solicited, we did not send a single contract to an exhibitor until the start of this month. We have received a tremendous amount of interest and verbal commitments from many of the biggest companies in the industry, and when we are ready to announce the exhibitors we are confident it will be a lineup that will make the trip to Los Angeles well worth it for the industry and consumers alike.
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