Nvidia supports Microsoft, Activision merger after Xbox deal to add games to cloud service
BRUSSELS — Microsoft said Tuesday it will bring its Xbox PC games to Nvidia’s cloud gaming service, after the chipmaker had reportedly expressed opposition to a major Microsoft gaming deal.
The announcement comes after Microsoft President Brad Smith met with European Union officials on Tuesday in a bid to convince them that its planned $69 billion acquisition of Activision Blizzard will be good for competition.
Microsoft is offering the olive branch to stop the takeover from being blocked and thereby expand its gaming unit, which represents 9% of its total revenue. While sales of Microsoft’s Xbox consoles are slowing down, the company has been drawing on its cash pile to expand the collection of games it can sell and allow people to play through its cloud data centers.
Microsoft President Brad Smith said at a press conference that, effective immediately, its Xbox games will be available on Nvidia’s GeForce Now cloud games service. Smith said if the Activision deal closes, it will bring all Activision Blizzard titles to GeForce Now.
Nvidia is now on board with Microsoft’s pending deal for regulatory purposes, the two companies said in a joint statement confirming the two companies 10-year deal. In January Bloomberg reported that Nvidia had gone to the U.S. Federal Trade Commission with complaints about the Activision deal.
“Combining the incredibly rich catalog of Xbox first party games with GeForce Now’s high-performance streaming capabilities will propel cloud gaming into a mainstream offering that appeals to gamers at all levels of interest and experience,” Jeff Fisher, Nvidia’s senior vice president for GeForce, was quoted as saying. “Through this partnership, more of the world’s most popular titles will now be available from the cloud with just a click, playable by millions more gamers.”
Microsoft proposed its Activision Blizzard acquisition in January 2022, but since then, the buyer has faced pushback from regulators in the U.S., European Union and U.K.
The Nvidia arrangement is meaningful because “now we’re addressing the full range of issues that have been raised by regulators as topics of not just interest but in some cases concern,” Smith said at the press conference.
In November, the European Commission, the EU’s executive arm, opened an in-depth investigation into the deal citing concerns that it could reduce competition in the video games market.
Activision Blizzard is the company behind popular game franchise Call of Duty. The EU commission said last year it is concerned that Microsoft could block access to the game on other platforms if the deal goes through.
The commission is also concerned that it could give Microsoft an unfair edge in the nascent area of cloud gaming. Microsoft has a service called Game Pass through which it charges gamers $9.99 per month to access a library of games. The Activision takeover would add some high-profile titles to Game Pass.
Nvidia’s GeForce Now has over 25 million members, while Microsoft said last year that 25 million people subscribe to Game Pass. Nvidia offers free and paid GeForce Now tiers, although high resolution is only available to those who pay. Members of GeForce Now will be able to stream through the cloud the games they buy through Microsoft’s app store, along with games listed in Epic Games and Steam’s app stores.
In December, Microsoft said it had “entered into a 10-year commitment” to bring Call of Duty to Nintendo when the Activision acquisition closes. The announcement was seen as a move to assuage regulators’ antitrust concerns. On Tuesday, Smith tweeted that the two signs have now signed a “binding 10-year legal agreement” to bring Call of Duty to Nintendo players on the same day as Microsoft’s Xbox, “with full feature and content parity.”
Smith declined to comment on the views of the European Commission in the hearing, but said the Nintendo and Nvidia deals are good for competition in the gaming market.
“I think if you’re a competition regulator, and you’re focused on the interests of consumers and competition, today was a good day,” Smith told CNBC.
Microsoft hopes for Sony deal
Smith on Tuesday led a delegation that included Microsoft Gaming CEO Phil Spencer and Activision Blizzard CEO Bobby Kotick, Reuters reported, citing a European Commission document that the news agency had seen. Sony’s gaming chief Jim Ryan was also in attendance, Reuters added. Sony, Microsoft’s biggest rival, opposes the Activision takeover.
Microsoft logo is seen on a smartphone placed on displayed Activision Blizzard logo in this illustration taken January 18, 2022.
Dado Ruvic | Reuters
Sony was not immediately available for comment when contacted by CNBC.
During a press conference on Tuesday, Smith held up a piece of paper saying it is an agreement he is ready to send to Sony.
Smith told CNBC that Microsoft is offering Sony the same agreement as Nintendo — to have Call of Duty available on the PlayStation the same time as Xbox with the same features. However, Sony still remains opposed to the deal.
“I live with the hope that we’ll come to terms with Sony,” Smith told CNBC.
“We’re not there yet. But I do think as we make progress with others, if we can get a deal done with Nintendo, if we can get an agreement with Nvidia, it should provide a path forward that others like Sony can build on as well.”
U.K., U.S. regulators take aim at deal
It’s not only European regulators that have concerns about the deal.
The U.K.’s Competition and Markets Authority said this month that the takeover raises competition concerns and may result in higher prices, fewer choices and less innovation. The regulator said it could move to block the deal and suggested several remedies Microsoft could take. One of those involved Microsoft divesting the business responsible for Call of Duty.
Smith said that Microsoft doesn’t see a “feasible path” to sell off the Call of Duty game.
“It just isn’t something that seems to be lining up,” Smith told CNBC.
“The only reason to sell it off is the CMA’s potential concern that if we buy it, we won’t provide it to others as broadly. I think that concern should be dispelled by the two agreements we’ve signed today.”
In December, the FTC filed an antitrust case against Microsoft attempting to block the Activision deal.
Google parent Alphabet also went to the FTC with dissatisfaction about Microsoft’s deal, Bloomberg reported.
“The European Commission asked for our views in the course of their inquiries into this issue. We will continue to cooperate in any processes, when requested, to ensure all views are considered,” a Google spokesperson told CNBC in an email.
Smith declined to comment on Alphabet’s exact concerns with the Activision deal but recognized the company’s potential misgivings.
“It’s easy to understand that Google might have questions about whether something like Call of Duty would be available in the future on say Chromebooks and the Chrome operating system,” Smith said.
The Nvidia agreement addresses that as the GeForce Now cloud gaming service is available on ChromeOS, Smith said. Microsoft is able to maintain compliance with the sorts agreements with European regulators that might require it to keep Call of Duty on Chrome OS, he said during the press conference.
“With the agreement we’ve done with Nvidia, we’ve just ensured Google will benefit as well,” Smith said.
Microsoft has maintained that its takeover of Activision Blizzard would not harm competition in video gaming and instead increase competition against large players like Sony and Chinese giant Tencent.
Microsoft has remained behind the likes of Sony and Nintendo in the video-gaming business. Microsoft’s Xboxes have lagged Sony’s PlayStation 5 and Nintendo’s Switch. Sony and Nintendo’s popularity has come from its large number of successful first-party games. Microsoft is looking to boost its games library with the Activision acquisition.
Activision Blizzard shares edged up during Tuesday’s U.S. trading session following the announcement.
Boonchai Wedmakawand | Moment | Getty Images
The founder of the company behind the IRL social media app was charged with defrauding investors of $170 million in the company’s 2021 funding round, the Department of Justice said Wednesday.
A federal grand jury in Oakland federal court indicted Abraham Shafi, 38 of Hawaii, with wire fraud, securities fraud and obstruction in connection with the scheme, the DOJ said.
Shafi was the CEO of Get Together, the parent company of IRL. The company was valued at $1 billion after its 2021 Series C funding round. IRL, which shuttered in June 2023, was a platform for users to organize events and offline activities. It found some traction in 2018, ranking among Apple’s top social apps.
Shafi allegedly spent millions on incentive advertising to boost installs of the app leading up to the Series C while maintaining to investors that the company spent “very little” on getting new users, the DOJ said.
He then concealed the expense by invoicing it to another firm, the DOJ said.
The indictment also alleges that the CEO and his fiancée used investor funds for “luxury hotel stays, luxury clothing, purchases from home furnishing retailers, thousands of dollars for art classes, and hundreds of thousands of dollars for SHAFI’s wedding, including payments for wedding guests’ airfare and luxury hotels.”
Shafi told CNBC in February 2018 that investors backed the company on its potential to compete with Facebook and Snapchat. Investors in IRL included Peter Thiel’s Founders Fund and the venture firm Floodgate.
Shafi’s co-founders at IRL included Scott Banister, the first board member of PayPal and an early investor in Facebook, among others.
Only Shafi was named in the DOJ indictment. He faces a max of 20 years in prison on each count, the DOJ said.
Last year, the Securities and Exchange Commission filed a civil lawsuit against Shafi for the same alleged scheme.
“Shafi took advantage of investors’ appetite for investments in the pre-IPO technology space and fraudulently raised approximately $170 million by lying about IRL’s business practices,” Monique Winkler, director of the SEC’s San Francisco Regional Office, said in a release at the time.
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A news ticker outside Fox News headquarters reads: Grand jury votes to indict former President Donald Trump, at the News Corporation building in New York City, U.S., March 31, 2023.
Brendan Mcdermid | Reuters
In less than three days, college football will be showcasing one of its most-highly anticipated week one matchups ever, with top-ranked Texas heading on the road to play reigning national champion and third-ranked Ohio State.
Fox is airing the much-hyped game. YouTube TV subscribers may be out of luck.
Google‘s YouTube said on Monday it may remove channels like Fox Broadcast Network, Fox News and Fox Sports if the company is unable to reach a new agreement with Fox Corp. by 5 p.m. ET on Wednesday. The two sides are still in a standoff, putting YouTube TV customers at risk of missing out on major sporting events and hefty ad dollars in limbo.
For Google, the issue is how much Fox is charging for its content.
“Fox is asking for payments that are far higher than what partners with comparable content offerings receive,” YouTube wrote in its Monday blog post.
YouTube TV has roughly 9.4 million subscribers. Most notably for sports fans, Fox is the home for many upcoming football games, both college and pro. The NFL season begins next week, with Fox set to air games starting on Sunday, Sept. 7
YouTube pays broadcasters like Fox to carry their channels.
In addition to football, Fox shows Major League Baseball games, and the MLB regular season is entering its final stretch. Fox will be airing some playoff games that follow, as well as the World Series, which is scheduled to start in late October.
Brendan Carr, chair of the Federal Communications Commission, weighed in on Tuesday.
“Google removing Fox channels from YouTube TV would be a terrible outcome,” he said on X. “Millions of Americans are relying on YouTube to resolve this dispute so they can keep watching the news and sports they want — including this week’s Big Game: Texas @ Ohio State. Get a deal done Google!”
The Texas – Ohio State game has added intrigue as its Arch Manning’s first marquee start as quarterback for the top-ranked Longhorns.
The hefty roster of Fox programs may be enough for sports fans to turn off YouTube TV in favor of other options. One place subscribers could turn to is Fox One, Fox’s standalone streaming service, which just launched last week, ahead of the NFL season. Fox One costs $19.99 per month or $199.99 annually.
The base plan for YouTube TV costs $82.99 per month and includes over 100 live channels and unlimited cloud DVR. If Fox does go offline for an extended period of time, YouTube will give members a $10 credit, the Google company said.
YouTube recently overtook Netflix, which has a market cap of $518 billion, as the top streaming platform in terms of audience engagement.
While YouTube and Fox have set a deadline of Wednesday to reach a deal, it’s common for carriage disputes to result in a deadline extension that would give the parties more time to negotiate.
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Alphabet CEO Sundar Pichai during the Google I/O developers conference in Mountain View, California, on May 10, 2023.
David Paul Morris | Bloomberg | Getty Images
Google has eliminated more than one-third of its managers overseeing small teams, an executive told employees last week, as the company continues its focus on efficiencies across the organization.
“Right now, we have 35% fewer managers, with fewer direct reports” than at this time a year ago, said Brian Welle, vice president of people analytics and performance, according to audio of an all-hands meeting reviewed by CNBC. “So a lot of fast progress there.”
At the meeting, employees asked Welle and other executives about job security, “internal barriers” and Google’s culture after several recent rounds of layoffs, buyouts and reorganizations.
Welle said the idea is to reduce bureaucracy and run the company more efficiently.
“When we look across our entire leadership population, that’s mangers, directors and VPs, we want them to be a smaller percentage of our overall workforce over time,” he said.
The 35% reduction refers to the number of managers who oversee fewer than three people, according to a person familiar with the matter. Many of those managers stayed with the company as individual contributors, said the person, who asked not to be named because the details are private.
Google CEO Sundar Pichai weighed in at the meeting, reiterating the need for the company “to be more efficient as we scale up so we don’t solve everything with headcount.”
Google eliminated about 6% of its workforce in 2023, and has implemented cuts in various divisions since then. Alphabet finance chief Anat Ashkenazi, who joined the company last year, said in October that she would push cost cuts “a little further.” Google has offered buyouts to employees since January, and the company has slowed hiring, asking employees to do more with less.
Regarding the buyouts, executives at the town hall said that a total of 10 product areas have presented “Voluntary Exit Program” offers. They’ve applied to U.S.-based employees in search, marketing, hardware and people operations teams this year.
Fiona Cicconi, Google’s chief people officer, said at last week’s meeting that between 3% and 5% of employees on those teams have accepted the buyouts.
“This has been actually quite successful,” she said, adding “I think we can continue it.”
Pichai said the company executed the voluntary buyouts after listening to employees, who said they preferred that route to blanket layoffs.
“It’s a lot of work that’s gone into implementing the VEP program, and I’m glad we’ve done it,” Pichai said. “It gives people agency, and I’m glad to see it’s worked out well.”
‘Wanting a career break’
Cicconi said one of the main reasons employees are taking the buyouts is because they want to take time off from work.
“It’s actually quite interesting to see who’s taking a VEP, and it’s people sort of wanting a career break, sometimes to take care of family members,” she said.
CNBC previously reported that the layoffs hurt morale as the company was downsizing while at the same time issuing blowout earnings and seeing its stock price jump. Alphabet’s shares are up 10% this year after climbing 36% in 2024 and 58% the year prior.
At another point in the town hall, employees asked if Google would consider a policy similar to Meta’s “recharge,” a month-long sabbatical that employees earn after five years at the company.
“We have a lot of leaves, not least our vacation, which is there for exactly that — resting and recharging,” said Alexandra Maddison, Google’s senior director of benefits.
She said the company is not going to offer paid sabbatical.
“We’re very confident that our current offering is competitive,” Maddison said.
Meta didn’t immediately respond to a request for comment.
Other executives jumped in to compare the two companies’ benefits.
“I don’t think they have a VEP at Meta by the way,” Cicconi said.
Pichai then asked, to some laughs from the audience, “Should we incorporate all policies of Meta while we’re at it? Or should we only pick and choose the few policies we like?”
“Maybe I should try running the company with all of Meta’s policies,” he continued. “No, probably not.”
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