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Shit we already know, you dont need to be an analyst to know how lobbying works and putting the right money in certain places will get you things. This new article is about the highly sophisticated and advanced worldwide lobbying operation that Microsoft has in place to ensure governments give them what they want. They spend $1 billion+ a year on this lobbying and schmoozing to ensure they will never again face a situation like they did in the late 1990's when they were nearly broken up by the US Government for illegal monopolistic behavior in what was then the largest antitrust action an American company has ever faced.
"Microsoft’s 21-month battle to pull off its blockbuster purchase of gaming company Activision has been one of the M&A world’s most tortuous recent sagas.The struggle has served as a striking demonstration of the power of a legal, policy and influence machine which costs more than $1bn a year to run, and which has made Microsoft one of the most effective American companies in practising a new form of global corporate diplomacy to advance its interests.
Getting the Activision deal across the line meant defeating a US government effort to block it in court, while also persuading UK regulators to allow an eleventh hour reworking of a transaction they had already decided to reject. It also involved winning over regulators in many other jurisdictions — including Brussels, where Microsoft was once deeply distrusted — at a time when acquisitions by big tech companies face significant opposition.
The deal’s completion against the odds, marks the culmination of more than two decades of work to recast the reputation of a company that was once seen as the tech world’s pre-eminent bully. Under Brad Smith, who became its top legal officer in 2002 and also took on the title of president in 2015, Microsoft has long worked to present a more conciliatory face to regulators.It has also sought to make itself useful to governments looking for help on everything from tech policy to emergency support against cyber attacks, part of an effort to build trust and increase the odds of winning a hearing when its own business interests are challenged.Yet while completing the deal would amount to a notable victory at a time when acquisitions by big tech companies are scarce, it may also bring a turning point in Microsoft’s relations with regulators around the world.“It helped to remind everyone that they are Big Tech too,” says one former Microsoft policy executive.
Smith took over as the company’s general counsel at a low point, after the US Department of Justice came close to winning a court-ordered break-up. His rise brought a complete change in approach. While Microsoft had previously fought regulators aggressively, Smith argued for conciliation and preached the need to be more transparent with regulators. He also pushed for changes in Microsoft’s business practices to head off potential antitrust challenges before they could gather steam, according to people who have worked with him.
Last year, facing complaints about Microsoft’s cloud licensing practices that threatened to trigger antitrust scrutiny, the Microsoft president publicly apologised and announced changes that he claimed would deal with the complaints. That attempt to pre-empt criticism, however, has not prevented the protests from growing louder — an indication that tactics that have served Microsoft well over the past two decades may be becoming less effective as its power in markets like cloud computing grows.Some of the tactics that helped boost its profits for many years have also been challenged.
This week, it revealed it had received a demand for nearly $29bn in back taxes in the US dating back to 2004-2013, prompted by a claim that its profits to low tax countries artificially lower its taxes.In another sign of increasing pressures on the company, Smith, usually the consummate diplomat, allowed himself a rare outburst in April after British regulators said they would block the Activision deal.
The move was “bad for Britain”, and Microsoft’s “darkest day in our four decades” there, he told the BBC. Yet the software company was still able to persuade the UK’s Competition and Markets Authority to reconsider, crafting a compromise that led to the agency clearing the deal while also enabling it to claim greater concessions from Microsoft than those won by other regulators. While Microsoft’s victory turned heavily on an intensive legal ground game and negotiations with regulators, it also reflects efforts over many years to put the company in a more favourable light.
Behind the scenes, Smith has promoted a concerted campaign of influence-building with governments around the world that even some rival tech executives concede has given Microsoft an edge. The software company has amassed “one of the largest armies of corporate diplomats that we’ve ever seen”, said Manas Chawla, a researcher who has studied the company. “They include policy officials working on everything from how to regulate artificial intelligence to protecting elections and tackling cyberwarfare against sovereign states,” he said.In one sign of the greater lengths Microsoft has gone to than other tech companies, it set up a representative office at the UN in 2020, taking up a floor of a building close to the organisation’s headquarters in New York where several Nato countries also have their missions. Ukrainian president Volodymyr Zelenskyy was the first head of state to pay a visit as part of an effort to encourage the company to invest in his country, while Microsoft hoped to use the contact to promote its cyber security capabilities.
The UN efforts are part of an operation under Smith that costs more than $1bn a year to run, according to people familiar with the company. The groups inside Microsoft reporting to him include legal, corporate and government affairs, accounting for what Microsoft describes as around 2,000 “professionals”. His organisation also includes a digital crimes unit and teams working on identifying cyber attacks and misinformation campaigns. Microsoft’s attempt to claim the moral high ground on issues like cyber security has grated with rivals, who claim the company uses its work with governments to distract attention from the role that vulnerabilities in its own software have played in causing the problems in the first place. Earlier this year, for instance, US commerce secretary Gina Raimondo was one of the several officials to have her email compromised after an online email account with Microsoft was hacked.
According to another former Microsoft executive, the company’s extensive international policy work reflects a strong belief that working to advance multilateralism and the rule of law globally will bring long-term benefits to the company and its customers. But this person also said these activities serve Microsoft’s more immediate business interests as well: “One of the things we learnt from the competition cases: we’re much better off building relationships and engaging and having people understand your business before you run into hard problems. That basic lesson has stayed with the company.”Smith’s bid to shape important policy discussions around tech has led to him striking ambitious positions on the global stage, though they have not always hit the goals that appeared to have been intended.
Six years ago, he called for a “digital Geneva convention” that would involve nation states swearing off cyber attacks against civilians during peacetime.According to one former staffer, that plan took a back seat after Microsoft realised that, if the proposal failed to get the backing of a majority of the UN’s 193 members, it could be reshaped in ways the company had not intended. “Be careful what you wish for,” this person added. Another person familiar with the digital Geneva convention said Microsoft had not backed off the idea and it remained a long-term “moonshot” for the company.
Smith’s willingness to put himself forward as an unofficial ambassador for the tech industry in this way has paid dividends for Microsoft, according to supporters. “Regulators are not going to give you a pass, but they will listen to you — you can hopefully have a credible voice with them, and that’s what’s really important,” one former executive said.As Microsoft finally puts the seal on its biggest ever acquisition, that strategy appears to be paying off".
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