taylor: i'm taylor riggs. let's look at how the equities performed. the s&p 500 off about -- take a look at the stocks index as well -- having one of the worst selloffs we've seen since last may, all about big tech and its rotation out of technology. if you change up the word, it's all because yields are rising. the two year yield finally back up to the highest since january of 2020.

that is the markets wrap. "what'd you miss?" starts next. caroline: it is a megadeal in every sense of the word -- microsoft with a landmark $69 billion takeover bid for activision. today, we give you the triple take on the deal that would make microsoft a true gaming giant. we will delve into the antitrust concerns and activision and claims of sexual disco nation. it is an eye-popping bid. romaine: this is a big deal. here's another triple take -- a $69 billion merger, and all cash deal, and we talk about the culture here -- just a few months ago, can fit a few people

at activision blizzard were pushing him to resign and he's going to hang on as ceo at least until this deal is done. it will be interesting to see what happens after that. it could potentially be a transformative deal, but quite expensive and a lot of people questioning whether it is too expensive. taylor: let's talk about that transformation in the gaming sector with a research director on gaming, e-sports, virtual reality and augmented reality at idc. we talked about some of the gaming companies as being standalone's and the rollout into a company like microsoft. what is the shift underway in the gaming industry? >> there's been a lot of consolidation from multiple perspectives and partially has to do with the covid-19 pandemic. gaming has seen a new influx of users and time spence and entertainment budgets.

people spend more time at home and so there's been a renewed interest in gaming and the pandemic has added fuel to the fire. you've seen a slew of acquisitions in many different areas. caroline: did activision need to be bought? is it better for the investor base to be folded into a larger business? lewis: i have mixed feelings about it. i think activision blizzard has been one of the most impressive growth companies in terms of the gaming industry, i think they've made a lot of smart decisions and have become the standard bearer for being an independent company, kind of blazing a path across consoles, pcs and the mobile screen. that's a direction microsoft would be going forward but there is a mixed feeling in the sense that i am concerned or have potential concerns about what is

going to happen to ps5 gamers or the switch gamers playing activision games and what happens to the innovation activision has had in the past? romaine: i'm curious about how you structure whatever this new unit is going to be in microsoft. a few days ago, we were talking to the ceo about the zynga acquisition and every franchise has its own little fiefdom that gives them a degree of autonomy and creative freedom. but when you look at microsoft's corporate structure, is that something you can envision happening or does that fit with what sasha and the della is trying to do here? lewis: i think microsoft does tend to have a hands-off approach. i think that is a good mark for them and they are smart and understand if you crunch the golden goose a little too

strongly, it is going to be negative for the entire deal and the entire company. you have a track record of being relatively independent in terms of these deals, but microsoft is trying to push azure very hard and push its game path ultimate and subscription services and therefore, activision blizzard is going to have to play ball in the clouds got -- cloud stuff and games obstruction model. taylor: what about changing the culture of the frat boys, the sexual harassment and some of the allegations that have come across with activision? how do you keep the culture of innovation but make sure you get more of the microsoft culture when it comes to fairness and equality? lewis: i think that's an absolutely fair criticism and this gives cover to those who have come under fire for this kind of frat boy approach to how

developers are treated in the company. one thing you can do is promote to studio head women, more ethnically diverse folks to get more people in that room and break up that sense that this is an all boys club, just creating games only a certain kind of gamer would like. part of it has to be about creating more diversity in the employees running the studios within microsoft. caroline: we are going to dig into that and much more depth in a moment. i'm interested in your perspective of the metaverse, the next iteration of gaming and how much you think this is a little over enthusiasm? already you have started to see the billions many anticipate through the world of nft's and the like being built into the gaming spectrum. lewis: i don't see activision

blizzard being a leader in that space before this happened. they have some major gains and that part where microsoft wants to go with this gaming future in cloud and's inscription models and whatnot, but in terms of activision blizzard being a thought leader, trying to get into the metaverse, there are many angles including advertising and how brands are going to be integrated. concerts and music and lots of other things. other companies have led down this path already and i don't expect any near-term big shoes are going to drop on the metaverse front specifically. romaine: can you give us a broader picture industrywide of how big the pie is? we've seen some data on how gaming is a couple hundred billion dollar a year is this. when you throw in metaverse or any of these ancillary worlds

out there that latch onto gaming, what are these companies really buying? lewis: our estimate is about 170 billion dollars, 180 billion dollars industry. most of that is software and services. it's growing at 10% or 11% since the covid-19 pandemic hit, which is a huge number. usually half that rate if you go back to 2019 or 2018. the metaverse is this idea of persistent places where you can interact with perhaps tens of thousands of people, perhaps a virtual concert or engage in games. the potential for interacting among certain communities is certainly there. but we are at the beginning of the on-ramp and there's a lot that needs to be in place first, including discussion about what

the standards will be and how real-world currencies are going to interact or not in that environment. romaine: we appreciate you taking the time to be with us. he's the research director of gaming, e-sports, virtual reality and augmented reality at idc. one of the other areas we have to talk about is antitrust concerns. the big takeovers playing out in the midst of a fierce antitrust environment. antitrust enforcers announced efforts to toughen reviews. let's bring in david mclaughlin for more on this. microsoft obviously went through the ringer a couple of decades ago when it came to antitrust. with what we know about the biden edit ministry and effort to be more scrutiny this of these deals in the announcement that we learned today, what is the environment right now? >> the important context is that

there is a lot of criticism right now in washington directed toward the big tech companies. primarily, that criticism is directed at apple, amazon, facebook and google. microsoft has largely avoided that scrutiny and that's partly because it went through its own antitrust lawsuit two decades ago. i think this deal, given that it is so big, and it is a big consumer brand, it comes in this environment where we have just how much microsoft is able to avoid the spotlight -- if this did win approval, i think this one is going to be tougher. taylor: what about the types of

deals and if they are able to avoid scrutiny? you think facebook, meta, amazon -- these are so apparently consumer facing. microsoft is making a bet more on the consumer, but it's not obviously a consumer facing product. is that the way they have been able to avoid some of that ftc scrutiny? david: i think that's part of it. i also think there has been a lot more criticism from the rivals of apple and google and facebook, retailers at amazon -- you don't really hear that. so lawmakers have been focused on the other four. it is -- those companies are

consumer facing, so there is a reason to pay more attention to them. i think with the announcement today about the merger review, reconsidering the rules, i think it shows regulators are rethinking how they approach all these companies, including microsoft. caroline: great to have some time with you about all things ftc. coming up, we discuss the controversy surrounding activision and the effort to change gaming culture. stick with us. this is bloomberg. ♪

romaine: today's triple take is focused on the big deal of the day -- microsoft did for activision. this is a company that has been dealing with lots of legal scrutiny about its culture. we are talking about activision, not necessarily microsoft. makes the timing of this a little bit curious. caroline: curious, but perhaps why they went for the timing. the ceo of activision facing a lawsuit in california and the ftc is investigating. you've heard these complaints about discrimination and

harassment, and the ceo potentially knew about it. they have been interned -- they have been trying to improve the culture but how can they move on it? romaine: we should point out this isn't just activision. we've heard anecdotal evidence saying that there is a broader culture in this industry that in their mind needs to be changed. taylor: let's get some more insight into some of the things that may or may not need to be changed. our guest has researched identity and video games. in previous conversations, we talked about maintaining a culture of innovation, but needing to shift the culture that has traditionally been within the gaming industry, how are you thinking about the culture and how to innovate in an appropriate way? >> absolutely. thank you for asking that and

thank you for addressing these concerns and having these conversations. when we think about the culture of gaming, sure, it's about innovation and pushing boundaries of what technology can do. but you have to remember there are people behind the scenes here. you have gamers in all of these folks bringing in the human bias and human errors. there's a lot of toxicity in a lot of these gaming cultures and a lot of harassment and ethical issues around labor that are not addressed. so when this acquisition happened, all of us woke up and saw this. our immediate concern was what about the problems we were talking about yesterday? are those going to get consumed into the microsoft culture? are they going to get addressed for the ceo leaves westmark i don't think a lot of us have a lot of high hopes about the changes that are needed for the culture. romaine: it will be interesting

to see how this is integrated into microsoft. they have a reputation of having a culture that is a little more in line with the realities that they hope to strive for. i'm curious about the gaming industry writ large and you referenced some of the issues that long predated some of the stuff we are talking about with activision. how much of that is both the culture within those companies but also the culture of the customers of a lot of these games themselves? kishonna: absolutely. it is a larger ecology. there is no one place to lay all of this at one person's feet. but i also see it as a manifestation, a top-down thing. gaming culture is reflective of the folks at the top. we enable the toxicity and harassment because we see a lot of those things in the industry at the top. activision blizzard, we have

been seeing the fallout happen at the executive levels of these companies. most of them are not exempt from these trends. so if they are giving the ok that it is ok for these things to happen at conferences and at the conference table, it is going to trickle down to the players, the gamers, the users and audiences who are replicating these patterns of abuse, especially in the online environment. i heard you talking about the metaverse -- what will microsoft be taking into the metaverse? i will stop there in case you had a follow-up question, but there needs to be an accountability structure to address a lot of these things because all of this is going to seep into what is going to transpire. caroline: many have said the interesting timing of all of this is, broadly speaking, money

talks. you are seeing a significant hit financially to activision blizzard because of the way it treated its workers and the airing of these grievances can be put to a selloff in the share price. do you think finally we are starting to see investors listen to the employee base and listen to some of these acts that do force change? it does mean financial incentive for people to behave. kishonna: i hope that is true. think about the lawsuits and fallout -- a lot of us have been waiting patiently to see what are these changes going to be and this acquisition happened and a lot of us are thinking is microsoft going to take over and are we going to need to ask microsoft these kinds of questions? i'm not sure if you can recall but when activision acquired

blizzard back in 2008, there were a lot of concerns about the culture of blizzard at the time. there was an article that pointed to the culture at blizzard and how it infected activision. we took this over and became toxic. they are addressing concerns people had in the mid to thousands about the culture of blizzard. it seems to be a passing of the buck or sleeping the stuff under the rug and nobody taking responsibility. there are a lot of questions left unanswered and it is still happening. i feel like it's going to be the same thing. microsoft will be like it's a new day, we can start over, but you are still acquiring the culture and climate of your acquisition. taylor: our previous guest hinted that one way to change this is to promote more diversity to managers to show your money is where your mouth is, that you are taking the

actions. does that go far enough? kishonna: not at all. a lot of individuals are perpetuating these workplace inequities, but you have to keep in mind that if we bring in more women, more folks of color, more international workers, we are bringing them into a culture that is -- i don't want to keep using the word toxic, but a culture that is problematic. who is the burden on? is it on the women and non-binary or trans folks or folks of color who are there suffering because of the inequality? is the burden on them? i think what you will find is when you bring those folks in their, you are bringing them into be subject to a lot of things happening in that space, so you need to address that. bringing in more diverse bodies is not going to solve that problem and i hope folks realize that. these things are embedded into

the core and fabric of a lot of these tech companies. taylor: i really in for it really appreciate all of those thoughts. really a lot to digest, so let's die just as in the next few moments and come back with our final thoughts. this is bloomberg. ♪

romaine: our triple take today was on the microsoft-activision deal. taylor: the associate professor had an interesting point where blizzard infected the culture of activision and concerns it continues to infect despite the higher culture being good. caroline: session a della spoke to this point -- his primary focus is the culture, ensuring it is preserved at microsoft.

romaine: and be on the culture, there is the issue of does this deal makes sense and is it going to be financially accretive? caroline: that does it for "what'd you miss?" bloomberg technology is up next. much more on that bloomberg-activision deal. -- microsoft-activision deal. this is bloomberg. ♪

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>> from the heart of where innovation, money, and power collide. in silicon valley and beyond, this is "bloomberg technology." with emily chang. emily: i'm emily chang in. san francisco. . this is "bloomberg technology." a 69 billion dollar deal. microsoft agreeing to buy activision blizzard and all past transactions for the third biggest gaming company.