Microsoft is buying Activision Blizzard – the video game company behind titles like “Guitar Hero,” “Candy Crush,” “World of Warcraft” and “Call of Duty” – in the largest tech acquisitions in history. Antitrust regulators are assessing whether the deal could hurt competition in the booming global video game industry, for numerous reasons including the fact that Microsoft already produces the widely used Xbox gaming console. Further consolidation in the tech industry elicits well deserved skepticism from regulators, but they should also consider how this deal could help America’s greatest geopolitical adversary: China.
To understand how, it’s first important to understand Microsoft’s long and close relationship with the People’s Republic of China and its ruling Chinese Communist Party (CCP).
Microsoft has operated in China for three decades, boasting on its website that its “most complete subsidiary and largest R&D center outside the United States is in China.” Microsoft Research Asia (MRA) has trained thousands of Chinese AI researchers, including top executives at companies like Huawei, whose products have been deemed such a security risk that the company is sanctioned by the U.S. government and rejected by free nations around the world.
Microsoft-trained tech talent played integral roles in building China’s oppressive surveillance state. A Financial Times report recently exposed that Microsoft itself worked “with a Chinese military-run university on artificial intelligence research that could be used for surveillance and censorship.” It is also widely known that China’s boundless national security laws require companies, including Microsoft, to fork over any data that the CCP deems necessary for “public safety.” With these, and many other, examples of Microsoft’s close relationship with China, it’s no wonder that one Chinese government official glowingly declared that Bill Gates was “bigger in China than any movie star.”
TheUSS Ronald Reagan (CVN 76) and USS Nimitz (CVN 68) Carrier Strike Groups steam in formation, in the South China Sea, Monday, July 6, 2020. (US NAVY)
(Mass Communication Specialist 3rd Class Jason Tarleton/U.S. Navy via AP)
The second thing to understand is that China’s government is ready to make serious moves in the video game industry – moves that could have major national security implications.
According to China government-affiliated news outlet Global Times, one of the Chinese regime’s top political advisors bemoaned the fact that “Chinese officers and soldiers are playing war computer games made mainly by foreign companies that could convey wrong values,” including the “ideologies of so-called ‘democracy’ and ‘liberty.'”
He called for the government to “boost funding and policy support to the domestic video game industry” to not only display “the good image of the Chinese military,” but also to possibly use video games to train their troops. “We need to push forward to develop independent and regulated military-themed video games and explore how to use them scientifically in assisting military training,” he said.
The third thing to understand is that China has a proven industry takeover playbook that they are poised to run in the video game industry. For a preview of what’s to come, look no further than the film industry. The CCP lured Hollywood in with the promise of new moviegoers, controlled and manipulated the content as best it could, acquired the industry’s technical and creative expertise over time, and built up its own distribution capacity. Now its propaganda films are among the highest grossing movies of all time.
It’s not hard to see the same process being deployed with video games, with Microsoft’s acquisition of Activision Blizzard as the catalyst.
At a time when Microsoft is doubling down on its investments and expansions in China, what will the CCP make Microsoft-Activision do? Will China force the merged company to censor any video games that it believes are “pro-Western?” Will the Chinese government require Microsoft to develop tools for their military? Tencent, the Chinese technology and entertainment conglomerate, already has a partnership with Activision, including a 5% stake in the company. Will China’s leverage over Activision only expand when its longtime partner Microsoft is in charge?
These are questions that lawmakers on Capitol Hill should be raising and every regulator should be asking of Microsoft before blessing a merger that expands the power of the world’s second most-valuable company, particularly one that is so chummy with the CCP.