Microsoft's Union Partner Urges FTC to Approve Activision Merger Agreement

Microsoft's recent support for organized labor has given the company a powerful ally in pushing the US Federal Trade Commission for a settlement to allow the software company's $69 billion acquisition of Activision Blizzard.

The Communications Workers of America has come out in support of Microsoft after the company said it would recognize workers who choose to organize at video-game maker Activision. The union, which represents nearly half a million workers in telecommunications, media, education and technology, has publicly cheered the deal as a breakthrough in an industry that has been hostile to organized labor.

CWA Chief of Staff Jody Calemine said that Microsoft's labor neutrality agreement sets a precedent for corporations pursuing mergers, and that this should be recognized by the Biden administration, which has cast itself as proudly pro-union. Calemine said that the FTC's decision last month to sue 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."

Calemine said in an interview that he is hoping that the FTC will eventually be able to settle its differences with Microsoft over the proposed acquisition. He said that there is still a chance that the two sides could reach an agreement and that the deal would finally go through.

The FTC's chair, Lina Khan, has said she's not interested in alleged monopolies promising to be good monopolies, so the quest for a settlement is a long shot. FTC lawyer James Weingarten told a judge Tuesday that the agency is "always open to any settlement proposal," but that "there are no substantive discussions at this time" with Microsoft.

FTC spokesperson Peter Kaplan declined to comment further on the matter. A Microsoft spokesperson also declined to comment further.

The recent complaint filed by the FTC against the Microsoft-Activision deal has been disappointing for labor advocates. This is especially after Chris Shelton, head of the CWA, met with Khan in October to urge her to let the merger go through. Khan has been a vocal supporter of organized labor in the past. In September, she told Congress the FTC “has a legal obligation to ensure that we are using our tools and authorities to tackle unfair methods of competition that affect workers.”

The FTC has proposed a rule that would prohibit companies from using non-compete agreements, which the FTC has found limits workers’ mobility and suppresses wages. This proposal comes as the FTC has ordered three companies and two individuals to cease enforcing non-compete restrictions.

The CWA welcomed the proposed rule on Thursday, but said that union representation is the best way to improve wages and working conditions. Beth Allen, a CWA spokesperson, said the FTC could make a significant impact on the control of corporations over our economy, our democracy and our work lives by considering an employers' position on unionization when assessing merger impacts or exercising its other enforcement powers.

Brian Callaci, chief economist at the Open Markets Institute, an anti-monopoly organization, said that the FTC's rule-making and enforcement actions are separate from merger reviews, such as the Microsoft-Activision deal.

The FTC's complaint doesn't focus on the labor market, so the harms from the merger are to consumers, Callaci said. An offer to address worker concerns shouldn't offset the harms to consumers because this wasn't a labor market merger.

Microsoft President Brad Smith told investors last month that while he’s confident in its case before the FTC’s administrative judge, the company is committed to finding ways to address concerns from antitrust authorities and competitors. He said that Microsoft is open to constructive dialogue and suggestions on how to move forward.

"We're always open to meeting with Sony to find solutions," Smith said in the Dec. 13 call. He also promised to "continue to meet with regulators elsewhere around the world," as European authorities evaluate the deal.

The European Commission is set to rule on the merger by mid-April. The UK's Competition and Markets Authority (CMA) is expected to issue a preliminary report in the next few weeks, with a final decision by April 26. The CMA said that three-quarters of the more than 2,000 public comments it received were in support of the merger.

The 57-person Proletariat unit in Boston said last week that it will seek to form a union. This includes designers, animators, engineers, producers and quality assurance workers. All three unionization efforts are supported by CWA.

In June, Smith promised to work constructively with Microsoft's own employees who choose to organize. This was the week before Microsoft announced its labor neutrality agreement with CWA regarding the Activision deal.

Approximately 300 workers at ZeniMax Studios have voted to form a union this week, becoming the first employees at the Bethesda, Maryland-based studio to do so. A Microsoft spokesperson said the company is looking forward to “engaging in good faith negotiations as we work toward a collective bargaining agreement.”