The Week in Business: A Big Bet on Gaming4 min read
What’s Up? (Jan. 16-22)
Microsoft Strikes a Deal
Microsoft on Monday announced plans to buy the video game company Activision Blizzard for almost $70 billion, its biggest deal ever. The company said the acquisition would help it compete in the so-called Metaverse, the nascent virtual world where some technologists believe we’ll soon live second lives. But Microsoft’s more immediate objective is probably to strengthen its gaming platform. Just as Netflix acquires content to compete for streaming viewers’ attention and subscription fees, Microsoft’s purchase of Activision — the maker of popular games like Call of Duty and Candy Crush — may bolster the library of games for Xbox Game Pass, Microsoft’s $10-a-month Netflix-style video game subscription service. The size of the deal, and the possibility that Microsoft could make some popular Activision titles exclusive to its platform, could bring renewed antitrust scrutiny to the company from federal regulators.
A Clash of Technologies
Airlines warned early in the week that a major expansion of fifth generation cellular service planned for Wednesday could disrupt flights. Unlike previous generations of wireless service, 5G technology uses radio frequencies similar to the ones used by the devices pilots depend on to determine a jet’s altitude, and for years, experts have said it could interfere with that equipment. Flight cancellations and chaos were ultimately avoided by a last-minute decision by AT&T and Verizon to restrict 5G service near airports. President Biden said that federal officials would continue to work with wireless companies, airlines and aviation manufacturers to find a “permanent, workable solution.”
Intel Invests in U.S. Chip Making
Intel plans to build a $20 billion chip manufacturing complex in Ohio, a move that has implications for geopolitics and the supply chain. During the pandemic, manufacturing disruptions and labor shortages caused a shortage of chips, which are mostly manufactured in Taiwan. Legislation that passed in the Senate last year would provide $52 billion in subsidies for the chip industry to help the United States compete with China on innovation by expanding its stake in a foundational technology. Intel plans to start construction in Ohio later this year and to begin producing chips there by 2025. Patrick Gelsinger, Intel’s chief executive, has said Intel might invest as much as $100 billion over a decade in its next U.S. manufacturing campus, with the speed and scope of the expansion depending partly on the availability of federal grants.
What’s Next? (Jan. 23-29)
A ‘New Normal’? Maybe.
Some public health experts hope that as the Omicron wave of the coronavirus recedes, the pandemic could become more manageable. What this would mean for the precautions that businesses take to keep their workplaces safe remains unclear, and policies have continued to shift. In a poll of Manhattan businesses employing 215,000 white-collar workers, almost one-quarter said they didn’t know when their offices would reach half their capacity. Businesses in the hospitality industry say they are struggling to decide when workers who test positive for the virus can return to work. And after the Supreme Court struck down President Biden’s mandate for large employers to require vaccines or testing, Starbucks scrapped a plan to make these requirements for its 200,000 workers.
A Big Push for Big Tech Bills
President Biden and other top Democrats have said that reining in Big Tech is a priority, but lawmakers are running out of time before the midterm elections, when Democrats could lose control of Congress. Over the next few months, they plan to push a handful of proposed laws that reduce the power of companies like Amazon, Alphabet and Meta. On Thursday, a Senate committee voted to advance one such bill that would prohibit tech platforms from promoting their own products over those of others. Other legislation aims to strengthen privacy, make it easier to break up the big tech giants, address misinformation and regulate artificial intelligence and cryptocurrencies. Most have a long shot at passing: Though lawmakers on both sides of the aisle mostly agree that Congress should do something to increase competition in the tech industry, they have different ideas on how to go about it.
The Fed Meets
Fed officials will meet for the first time this year starting on Tuesday, and at the top of the agenda is fighting inflation. Jerome H. Powell, the Fed chair, said this month that the economy no longer needed as much help, and with prices continuing to climb at a record pace, economists expect it to raise interest rates three or four times this year. The Fed has also begun winding down its bond-buying program, which it used to stoke growth during the pandemic. In other economic news that will be watched closely this week: The government will announce on Thursday how much the U.S. economy grew in the fourth quarter.
Sales of electric cars passed diesel in Europe for the first time. Shares of Netflix and Peloton, two pandemic winners, plummeted. Amazon released a name for its long-awaited “Lord of the Rings” series. (It’s “The Rings of Power”). And quitting is contagious.