Israel-Hamas War, Microsoft and Activision Close the Deal

Possible from Mahart. We're Innovation, Money and Power Collie in Silicon Vallet NBN. This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.

Amed Ludlow in San Francisco. Caroline hides off today. This is Bloomberg Technology. Coming up on the program, We'll bring you the latest updates from the Israel Hamas war and speak with Israel's first ever chief technology officer, and Microsoft and Activision close the deal after nearly two years of fighting for the sixty nine billion dollar transaction to gainful approval.

We have full coverage ahead.

Plus we'll bring you more from our inaugural screen time event in Hollywood and hear from the CEOs of Netflix YouTube and also the head of the Kardashian Plan. The main story is what's happening in the Middle Least. I want to get straight to the latest developments in the Israel Jamas war. Joining us from Tel Aviv is Bloomberg correspondent Oliver Krook and Oliver.

Let's be frank. A lot has happened this Friday.

It has been completely intense twenty four hours. It really started at around five thirty six o'clock this morning when we got that initial sort of evactuate evacuation order from the Israeli Defense Forces where they told the residents of Gaza City in northern Gaza that they should leave the area, and that is sort of how the day began, and the UN said that that is basically an impossibility.

It's important to.

Get these people out, says the Israeli Defense Forces, because they want to minimize civilian casualties. But we're talking about displacement of one point one million people, that is about half of the the population of Gaza, and to then compress them into about fifty percent of the space that they begin with is something that the UN is saying is going to turn tragedy into catastrophe. And the tragedy we're talking about is a death toll that has exceeded fifteen hundred.

People in Gaza.

The healthcare system is entirely overwhelmed. They have no water, electricity, food, internet, and Israel overnight continued to strike seven hundred and fifty military targets and of course is all in response to the attacks on Saturday that left now we know thirteen hundred Israeli's dead, mostly on Saturday, and mostly civilians.

Oliver is a frankly credible list of developments. As you say, it's been a sort of twenty four hour process. There is a bigger picture question about the Middle East, and you have been on the ground there in Tel Aviv, but also thinking about neighbors and what else is in the new cycle.

Completely the geopolitical complexities here are absolutely vast, and you know, so it comes with a lot of support from Western allies to Israel. So it started with Blinken yesterday. We have Ursula underline here today. The US Defense Secretary also here today. But yesterday Blincoln's message, where there were really two of them. There's one of sort of total and unconditional support, but then a second message, and that is about how Israel does about taking out Hamas is going

This obviously is the.

Background to all of the meetings that Blincoln has conducted today. Right now, Anthony Blinken, he just gave a press conference with the Katari foreign minister. He's in Kutar he's meeting with the Saudis, Egyptians, you know, the UAE, and this is the conversation that you're gonna have everwhere. Just as Israelis we're seeing all these horrific pictures on their phones and that sort of put pressure on the government even more.

A Palestinian flags. The West Bank.

There have been protests Lebanon, Pakistan, Yemen, and Iran has been meeting with the leadership with Hesbellah and Hamas in Lebanon today. So really a really very complex situation, and again these countries are going to come under men's pressure themselves.

Later on in the program, we are going to continue to have the conversation about social media. You know, Bloomberg has reported extensively. We have discussed on this program that there's video content on lots of platforms that is circulating that purports to be one thing and in fact is another.

It is not what it purports to be.

And so you know, experts the government urging caution on that front that there's an issue of logistics and mechanics as well, Oliver, that you on the ground are starting to cover and understand an evacuation. And then you know defense, iron dome, the role of technology. What have you learned since arriving in Tel Aviv.

Yeah, so there is the question of iron dome and could it, you know, potentially be depleted or overwhelmed, and this sort of hangs over it. We understand that some of the sort of ammunition for iron dome from the US supplies that is here in Israel was transferred today. We know that the US has sent equipment yesterday and that there is more on the way, but there is it's not really known how many rockets Hesbala has, for example in Lebani, and many of these are far range rockets.

And if they do in fact attack, that.

Just opens up a whole other set of questions about how do they go about this, And also they relinquish many of their technological and military advantages once they get into a sort of urban combat zone. And then even if they do eliminate Hamas, what do they do next? What is the exit strategy? What comes after that? These are all the questions that we're going to have to be asking for the next.

Days and weeks.

Bloomberg Television correspondent on the ground in Tel Aviv, Oliver Krook. Stay tuned to Bloomberg all channels but bloom Television in the coming days. Oliver, thank you for reporting. We stay with the story of the Israel Hamas war, but think about technology joining us now. Is Yonatanadiri, who served previously as Israel's first CTO, and hen had let's start there.

Well, first, of all, thank you, thank you for having me on the show. The events that started on Saturday morning with this isis type massacre of innocent civilians and not only get north of twelve hundred people have really challenged Israel. But you know, if to paraphrase from the American national anthem, Israel is the land of the free and home of the resilient. And I'm sure that with

This is not just centerals technology and defense.

Israel as a powerhouse of technology and solving in tackling the biggest problems facing humanity and our ecosystem, is committed to that its role within this global context.

Jatan.

One area of the technology discussion is in intelligence and data, and a debate that's taken place on the show this week was about the preparedness of Israeli intelligence forces. We had one academic on the show who said it wasn't a lack of intelligence, but simply a lack of imagination at the scale of what Hamas would would be able

Well, I think you're totally right ed spot on.

Israel has deployed numerous technologies. Think the core one, as you've discussed with Oliver, was iron dome. I remember in May two thousand and nine, I was on President Parris's team as we came to meet President Obama in the White House right after the inauguration. Technology was a big part of that. Defense technology was a big part of that. I think you're totally right about the limitations of legends

We know that from the Investigative Committee post.

Nine to eleven has had quite a significant degree of intelligence, but it was about putting those bits and pieces together and anticipating that people would actually go into the cockpit and transform an airliner into a live bomb and you know, crush it into into the Twin Towers and to other targets within the US. So I think you're spot on on that you can be a superpowered the size of the US.

You can be a technology.

Superpower the size of Israel and deploy you know, frontline technologies. But at the end of the day, it's about the ability to imagine, you know, what could be that human factor usage of those signals in a terror context.

Johannaston and I would just point out that that viewpoint that it was a lack of imagination rather than intelligence, the viewpoint of Professor Charles Freilich of Columbia, a former intelligence advisor to your country, Israel, not my own. We've talked a lot about the sort of hard power, hardware, technology response, and software response.

There's talk a bit about the industry.

Yourself are a startup founder. Israel's economy has deep roots in technology. What is it like right now to operate a startup, a small startup in Israel with what's happening in the country.

Or I think you know, fundamentally, Israel has had a over the last just week, a centrillion dollar worth of marketcap voad of confidence if you will, between Microsoft, Apple, Google, Amazon and Nvidia, who all have deployed significant parts of their R and D. Intel has their autonomous our brain here in Israel. Apple runs part of its design of chipsets and seniconductors sought us.

In Tell again, Google has a very profound base of our and DA Israel.

They have all and the jazz at Amazon, Soundar Pichai and Jensen Gwang.

The leadership of those companies have.

Unequivocally supported Israel and the ecosystem here. If we had two to three trillion dollars more of support in what's going on here in the life sciences industry and the cyberspace industry, I would say that part of what enables our conversation right now, and for the viewers at home, from the moment they woke up this morning untiled right now,

To our workforce, to the broader community.

But how do we remain committed to salting humanity's greatest challenges even when we're under war, under attack of thousands of rockets in this insidious attack kind of icis class from last Saturday.

That's what we have to balance and that's where committed to do.

Jonatan Adieri, founder and CEO of Healthy dot Io, but also former CTO of Israel, the first CTO of Israel, thank you for your time, and he mentioned Jensen Wang a programming note that Nvidia had been due to hold its AI summit in Tel Aviv on Sunday Monday, but it was canceled given the events of the week. Now coming up here on Bloomberg Technology returned to m and A is the biggest deal in gaming history has finally come to fruition after UK regulators approved Microsoft's revised offer

This Microsoft brought forward, this fundamental concession, this fundamental restructure of the deal, which now puts all of the cloud streaming rights in relation to Activision's games content, all of the games that are available now but also any content that's created over the next fifteen years and those rights are put in the hands of Ubisoft and independent competitor, and that breaks the stranglehold that we were concerned Microsoft would have over this important cloud gaming sector.

Now was the uk CMA CEO Sarah card Or on the deal, joining our colleagues earlier today. For more, let's turn to Cecilia Deanna Stasio, who's our video game report to hear at Bloomberg. Okay, it's happened. It's darne, it happened, But it's happened. Let's go back to the origin of this because everyone forgets because the discussion from the regulator is about cloud This is about mobile gaming.

Right.

What is it that Microsoft now is going to have to do with Activision to catch up in mobile gaming?

Yeah, a lot has changed in the mobile gaming landscape since the deal was announced. Mobile gaming has been a behemoth for a long time. Microsoft has been behind on capitalizing on interest in mobile games, casual games, free games for smartphones and now with Candy Crush, which Activision makes,

What do we learn about mechanics or what happens next. I think a headline that I saw on the Bloomberg terminal is that Bobby Kotik is going to leave the company or I guess the joint entity off to twenty twenty three.

Yeah.

So Bobby has led the company for decades and brought it to where it was today, and he he has said that he will step down at the end of this year, and until that time will be working under Microsoft's gaming chiefs, Phil Spencer, who became famous through stewardship of Xbox.

When last it was disclosed, Activision had like thirteen thousand employees.

This deal has dragged on.

Taking Activision and merging it with Microsoft is not going to be straightforward. Just as a Beat reporter who knows this industry inside and out, how do you think that's going to go?

Wow?

I mean, consolidating two companies is never easy for two companies like this, especially with a Microsoft that has so many different capabilities across so many different platforms and technologies. I think it will be It will be an immense challenge. Microsoft is not immediately adding activision schemes to game Pass, which I think you know has been one of the really big exciting things that Phil Spencer and Bobby have

Alright, Bloomberg, Cecilia Deannastasio, all across this deal for months and months and months, Thank you very much.

Okay, time for talking tech.

First up, the king of K pop is building the next bt s in l A Bong she Hawk, founder and chairman of Haibee, wants to replicate the formula that changed the pop music industry. While the world's biggest boy band is on hiatus. You also discussed the role of AI in K pop with Bloomberg's Suhi Kim and.

Lucas Show.

No Tongue, Curious Home, and There One for the K pop fans. Now Netflix, Coco Head surround Us also spoke at the bloombergt screen Time event in LA on a wide range of topics, including the actors strike, cracking down on passwords sharing, and reflecting on the pace of streaming in the medium industry.

Have listened saved this industry because where we were heading at that time. Remember when we started this business of streaming, we started licensing content from the networks, and at the time that we were licensing, we could only get what.

Was available, which was nothing.

So we were licensing from the bottom of the barrel, things that had no revenue for anybody, shows that didn't get the syndication, things that weren't otherwise.

Sold, kind of like what to B and some of the AVOD services did. It came around where they started.

And we gave it away with the DVD business, and you got what you paid for back then. But I'd say what happened was that's created a whole new revenue stream for the networks in the studios. It created a whole new residual revenue stream for actors and performers who performed in those projects that were sitting on the shelf, and really kind of got the ball rolling in a way that you know, obviously, I think these things can.

Take decades to build.

But with their big, meaningful businesses, you know, that's that's a good investment, and i'd say good good business. For us, it's you know, thirty two billion dollars of revenue and six billion dollars of profit, and we've been growing the business.

Pretty dramatically and pretty quick. We grew pretty quickly.

We're not growing as fast right now as we want to, but we are still growing the business.

So I'm curious on that point because you you guys in your remarks, I think your last learning support talked about how you still aren't growing as quickly as you'd like to. There was a point in time where every year like clockwork, Netflix, but basically add twenty five million to thirty million customers. Yeah, that obviously post pandemic has come way down. What are you doing about that? And do you think you can get back to the level of growth you were at three four years ago.

Look, I think the key to it is, you know, growing the growing revenue, and I think for us that's a combination of you know, putting a great product on the board. When you talk about is streaming a good business, it is if you do it well. And I think I would say the team at Netflix in terms of the programming, Bella Bajari and her team are phenomenal at focusing on what people love and their creative team is

And I'd say because of.

Our distribution footprint and our recommendations that you have the ability, if you're telling a story from Korea, to be the biggest television show in the world. That can only happen on Netflix. And it's not just taking obscurity and making it big. Imagine somebody as big as David Beckham who releases his the Documentary on Netflix and in days grows his social media following by half a million people. And

And games.

And so as you look at that there, and we're just in our infancy in those businesses, then about five percent of consumer spending.

So we're a ton of role.

For our TV and radio audiences worldwide.

It's official.

Microsoft's completed it's sixty nine billion dollar purchase of Activision Blizzard after nearly two years fighting with global regulators who threatened to halt and indeed stop the deal. This is the biggest ever acquisition in the video games industry. I'm delighted to bring in Activision Blizzard CEO Bobby Kotik. Bobby, good afternoon, and thank you for your time joining us from New York City.

Thanks for having me ed.

Bobby.

You and I have been talking about video games industry. We've been talking about cloud, but the origin of this deal was mobile gaming, and I just ask you to reflect if now that it's all said and done, Microsoft will be able to make some progress in mobile gaming.

Look, I think there were a lot of great reasons for this merger.

Mobile is an important part.

I think one of the things that we've all benefited from is as smartphones became the dominant form of delivery devices for video games, we started to see the democratization.

Of video games.

And for most of the thirty some od years I've been running the company, we made games for consoles and for PCs, and those were really limited to people who were middle class consumers in developed countries. And over the last ten years, what we've seen is the dramatic expansion

Bobby, I know that you also engage with the gamers the community. We asked the questions to the community, what would you ask, Bobby Kotek? I think the resounding question is what is it that Microsoft could offer activision gamers playing your different titles that you guys couldn't offer on your own if you'd remain a standalone company.

Well, I can't say that there's any specific thing that the Microsoft can will offer that we couldn't. What I would say is what's the most important is access to talent. As the market it continues to grow, as you see the intensified competition that's coming from so many companies with aspirations to make and sell video games, one of the things that we were realizing is that access to talent

That's the technology side, and to all great technologies, there's a cost. I remember you saying that at times like Activision wasn't looking to sell, didn't need to.

When this deal came together in the outset.

Was it because the financial position had changed and Activision did need to sell.

No, we had you know, we.

Merged with a stellar balance sheet and strong financial performance. It really was you know, our principal responsibility is providing a return to our stakeholders, and when Microsoft approached us, they made an offer that was in the best interest of the shareholders. Ninety eight percent of the shareholders voted for the transaction, and so that's you know, it's our principal responsibility as a board and for me as a CEO.

The exciting thing is that we actually.

Sold to a company that has a history almost as long as ours of making video games. And if you think back to the early years of Flight Simulator, you know, there's a company that has been in the game industry for a long time. They you know, people are passionate about gaming at the company, and so when you think about a perfect home for the next you know, generation of gaming, Microsoft is going to be a fantastic place for our incredibly talented people to have opportunities.

Bobby, how did this deal come together? What's the origin story?

Well, it came together pretty quickly. Sauti and Phil gave me a call and.

Said that they were really excited and enthusiastic about this as an opportunity, and is it something that our board would consider, And I of course said yeah, absolutely, And you know, it didn't take very long after that to see the logic of it.

You know, it's a it's a perfect combination.

And like I said, given the intense competition that you're seeing from you know, every big technology company, not just you know in the US and Europe, but in China and Japan, I think that you know, this gives us, on a combined basis, the opportunities to develop Nason franchises, to take advantage of some of the titles in the library that haven't actually been developed in a long time. You know, right now is a really great moment in gaming.

Welcome to our global Bloomberg television and radio audiences. We're speaking with Bobby Kotek, Activision CEO. But it was announced Bobby that you will work with Microsoft under Phil Spencer just through to the end of twenty twenty three. This is the biggest deal in video game's history. Activision has more than ten thousand staff. Is that enough time? I guess my question why not stay on longer? You have run this company for almost three decades.

Well, it's probably appropriate for me being sitting here at Bloomberg right now. But you know, Mike Bloomberg is one of the most inspiring philanthropists that I have ever had the pleasure to know. And you know, I just turned sixty last year, and I'm personally really excited about the opportunity to help reform K through twelve education, think about why we reduce hatred and intolerance in the world, focus on bridging relationships with countries like China.

So there are these filmthropic.

Interests that I've always had that I really want to focus on and make my priority today.

And a reminder to our global television radio audience that Mike Bloomberg is the founder and majority owner of Bloomberg LP, which of course owns Bloomberg Television. Bobby twenty four hours ago, an industry colleague of yours, Laura Meeli of Electronic Arts, who I believe you know well, was on the show. On the close of this deal, EA will become sort of the largest independent studio left.

And yet she gave a glowing review of the deal.

You know, I'm paraphrasing, but basically said this puts video games on the map in the context of the entertainment industry. But she also conceded that EA is a target, right, And I wondered if you'd reflect on the years of negotiating regulators to get this deal done, if you think that ANYA can remain independent, or if this opens the door to consolidation.

Well, EA is a fantastic company.

I started my career as a developer of software for Electronic Arts, and so I will always have a great reverence and respect and appreciation for the company. You know, it's an extraordinary company, and you know that I think they can remain independent and continue to be as successful as they've been since they were founded in nineteen eighty three.

That give me give me a real answer here, Bobby, that you know Microsoft buys Activision, is this kind of the signal of where we're at with the video games industry, that the studios that creators have to live within a much bigger technology entity because of AI the need for cloud compute.

Well, I don't think that's the case at all. I mean, you look at an example of a company like Roadblocks, you know, it's you know, it was example, it was a startup not less than ten years ago, and they've built an extraordinary business. There's enormous access to capital for video game startups still today. I think, in fact, probably more venture capital has gone into video game companies in

So if somebody buys EA, I get it's a hypothetical. It leaves very few options. What do you think that entity looks like?

I'm I try I really understand the question ed.

Well, it took Microsoft to spend seventy billion dollars to buy Activision. If there's going to be consolidation in your industry, and you've led in this industry for three decades, right, who do you think could buy Apple based on your experience? Buy EA based on you without putting words in your mouth, based on your experience of the last two years.

Oh, I wouldn't want to speculate.

I mean, there are just so many business combinations that are possible, but I don't have an informed view of that.

Sitting here today, Phil Spencer, what task does he have to take all of the people working at Activision and bring them into Microsoft. Do you think that there's anything he can learn from your company?

Look, we have a fantastic company, with an extraordinarily talented workforce. People are passionate, motivated, enthusiastic, excited about this merger, and Phil is an extraordinary leader. I couldn't think of a better person to give the reins too for the business. You know, he is a passionate gamer, He's been involved in this industry since nineteen eighty nine. You know, he's incredibly technically capable, visionary leader.

People love working.

With him, and I think it was actually one of the really appealing parts of this transaction was to know that the people that I've worked with for three decades are going to have a leader who is extraordinarily capable and passionate and compassionate and will do a wonderful job leading the combined companies.

We're speaking with Bobby Kotik, the Activision Blizzard CEO here on Bloomberg Television and Bloomberg Radio, and Bobby, as we discussed, you will stay until the end of the year and then focus it sounds like on philanthropy. But to those that don't know you as well, you know, the video games industry and market is huge, but there will be people that don't know your backstory. It's started in software, right It started. There's a tie to the early days

Look, AI is going to in fact, when you think about the talent that it will be re pier to move the art form forward and to be able to create new innovation. AI and machine learning are going to be the important new technologies that are going to be transformative for the future types.

Of games that will create.

There are so many important applications, whether it's generating art and animation, or onboarding players or creating greater experiences for players through better tools.

Like player match.

There is an enormous amount of benefit that will come from the.

Evolution of AI.

It's the early innings though, of really figuring out how to translate what is the available technology today into practical solutions for gaming.

But I think this is one of the big areas.

Of opportunity for us on a combined basis, because Microsoft is clearly right now. I think the leader in AI and machine learning. So I wanted to say thank you very much for the opportunity to have me today.

I really really appreciate.

It, and I look forward to continuing the conversation.

And it was very very genniferous a view to include me.

All right, Bobby Kotik back division CEO for now, thank you, Thank you very much, Bloomberg Technology, thank you. Okay, let's go back to some of the Bloomberg screen time highlights, some of which you were just watching. Starting with YouTube CEO Neil Moens speaking about his priorities when it comes

It's very early on, we're a few weeks into the season, but I feel really, really good. I feel that the first and foremost my priorities, literally from the day that we signed the deal was on the user experience, our

You like the multiview.

I use the multiview every week myself. I like the multiview, especially the one with red zone in one of the windows for me, and that's like, you know, as a huge sports fan, like that is like kind of like the perfect Nirvana experience for me.

You talked about being a platform for sports and having different rights. As I unfairly mentioned at the top, you're a big NBA fan, those rights are coming up. Are you interested?

So what I will say is we're taking one step at a time.

Right now.

The NFL Sunday Ticket is a is a big area focus for us. And again, as I said, getting that viewer experience right, making that game day experience on Sunday flawless and seamless, and you should expect from us a lot more innovation there in terms of products, in terms of creator integrations, all the things that our special younger fans of the NFL on YouTube expect. You should see more of that through the season and in the mini seasons to come.

So that's the focus.

You know.

Regarding the NBA, they have been longtime partners. They operate one of the largest channels on our platform every I mean, my fifteen year old is a huge sports fan just like me. He watches a lot of NBA highlights and he watches them on YouTube through the lens and the analysis of a lot of his favorite creators, and so we have a long partnership with them. But in terms of our focus right now, it's about this NFL experience.

That was YouTube CEO Neil Moen at our Bloomberg screen Time event in Hollywood, Los Angeles. You can catch more of that conversation online. Wrapping up our coverage from the inaugural Bloomberg screen Time event in Hollywood, we sat down with the matriarch of the Kardashian family and discuss what led to their pivot to streaming.

I really felt like streaming was in the cards for us, and my family really wanted to try and tried to take a stab at that because that was really the

We keep saying lucky, and it's interesting because it wasn't luck that first brought you to thinking about infomercials, about seeing what perhaps you hadn't seen at the time, which was a champion you're married to that you wanted to.

You know, that relationship that.

Bruce at that time had with people who appreciated his sports, and then you learn into infomercials and Sunny became linear television than the transition to screening. How have you always been able to see basically where the consumer's going.

I think I do like to lean into opportunity and I do like to think about what the next thing could look like. And in those days when it was about, Okay, we have bills to pay, kids in school and things going on, and how is this going to happen? And

Usually they do.

It and they thrive and grow and perform on their own and with me, we get to do it all together. It's not just one of us trying to do it all by ourselves and create this world for the whole family. But we all get to have a part in our are present and our future and what we're going to do. So there's lots of family meetings and we discuss what next steps are going to be. And the kids are I mean, they've got amazing work ethic and they never stop.

So I feel like it.

You know, it takes a village, It takes all of us together, and I think that's the magic.

Chris Jenner there from our first ever screen Time event in Los Angeles. Well that does it for this edition of Bloomberg Technology. Don't forget check out the podcast wherever you get your podcast, Apple, Spotify, iHeart, and of course on all of the Bloomberg platforms. That wraps it up for what's frankly been one massive week in the world of technology.

Caroline's off today. She'll be back next week.

But from here in San Francisco and Silicon Valley wherever you are in the world. This is Bloomberg Technology