The December day in 2021 that set off a revolution across the videogame industry appeared to start innocuously enough. Managers at a Wisconsin studio called Raven began meeting one by one with quality assurance testers, who vet video games for bugs, to announce that the company was overhauling their department. Going forward, managers said, the lucky testers would be permanent employees, not temps. They would earn an extra $1.50 an hour.
It was only later in the morning, a Friday, that the catch became apparent: One-third of the studio’s roughly 35 testers were being let go as part of the overhaul. The workers were stunned. Raven was owned by Activision Blizzard, one of the industry’s largest companies, and there appeared to be plenty of work to go around. Several testers had just worked late into the night to meet a looming deadline.
“My friend called me crying, saying, ‘I just lost my job,’” recalled Erin Hall, one of the testers who stayed on. “None of us saw that coming.”
The testers conferred with one another over the weekend and announced a strike on Monday. Just after they returned to work seven weeks later, they filed paperwork to hold a union election. Raven never rehired the laid-off workers, but the other testers won their election in May 2022, forming the first union at a major U.S. video game company.
It was at this point that the rebellion took a truly unusual turn. Large American companies typically challenge union campaigns, as Activision had at Raven. But in this case, Activision’s days as the sole decision maker were numbered. In January 2022, Microsoft had announced a nearly $70 billion deal to purchase the video game maker, and the would-be owners seemed to take a more permissive view of labor organizing.
The month after the union election, Microsoft announced that it would stay neutral if any of Activision’s roughly 7,000 eligible employees sought to unionize with the Communications Workers of America — meaning the company would not try to stop the organizing, unlike most employers. Microsoft later said that it would extend the deal to studios it already owned.
Q.A. testers can work grueling hours for low pay, and testers at other studios were already considering a union. Two more groups of testers — one at Activision and one at a Microsoft subsidiary called ZeniMax — voted to unionize after the company’s neutrality announcements.
Now that Activision is part of Microsoft — it closed the purchase in October — testers at several parts of the combined company are seeking to unionize as well, according to union officials. These officials say that the company has bargained in good faith and that the two sides have made considerable progress toward a first contract. Within a few years, Microsoft could have over 1,000 union employees working under collective bargaining agreements, making it an outlier in big tech.
On one level, it seemed obvious why Microsoft, once a poster child for corporate ruthlessness, would go this route: The company wanted regulators to bless its deal with Activision. Given the Biden administration’s close ties with labor, it didn’t take a Kissingerian flair for strategy to see that a truce with unions might help. Cynics were quick to point out that the company laid off nearly 10 percent of its video game workers, most of them from Activision, once the deal was in hand.
Still, many large tech companies have business before the federal government — and almost all have taken steps to discourage unionization. That includes Amazon, Apple and Google, which are in the sights of antitrust regulators.
Like Microsoft, these companies routinely position themselves as progressive employers, pointing to corporate diversity initiatives and support for L.G.B.T.Q. rights. Some channeled their employees’ anxiety over Trump-era policies on travel and immigration. Yet only Microsoft, whose leaders say they have been on a “journey” rooted in the principle that “people have a fundamental right to organize,” has taken a permissive path on unions.
And for some employees, that’s a key distinction. Workers who have sought to unionize at Amazon, Apple and Google don’t seem persuaded of their employers’ benevolence, pointing to evidence of retaliation. (The companies have denied these accusations and say they respect workers’ right to organize.) The workers note that Amazon and Google have hired consulting firms that specialize in fighting unions.
By contrast, employees who have sought to unionize at Microsoft consider neutrality “an absolute gift,” said Autumn Mitchell, a quality assurance worker who was part of the organizing campaign.
All of which raises a question: In an age where companies routinely proclaim their commitments to civil rights and the environment, what does it even mean to be a woke employer? And can Microsoft, on many days the most valuable company in the world thanks to its success in artificial intelligence, and with a history of squeezing competitors, truly claim to be more evolved than most?
Remaking a Corporate Image
It’s not hard to understand why Microsoft executives in the 1990s sometimes came off as villains. In a case that went to trial in 1998, the Justice Department said Microsoft had illegally schemed to crush Netscape after the smaller company rejected its offer to divvy up the browser market. Witnesses said Microsoft executives tossed around phrases like “cut off their air supply” and “knife the baby” when discussing competitors. (Microsoft denied at the time that it had acted illegally; some executives denied using such phrases.)
Microsoft successfully appealed a judge’s decision to break up the company, but the ordeal still proved costly. It prompted comparisons with the great monopolies of yore, like Standard Oil, and cast a shadow over future deals, like the company’s abortive attempt in 2008 to buy Yahoo. A court monitored the company for nearly a decade.
It was during the antitrust litigation that a Microsoft lawyer named Brad Smith auditioned for the job of general counsel on the basis of a simple philosophy: “Make peace,” he urged his higher-ups.
Mr. Smith got the job, and Microsoft began to cultivate better relationships with government overseers. Even when Microsoft believed regulators were overstepping their authority, Mr. Smith later recalled in a speech on the legacy of the case, the company would often say “let’s figure out what it makes sense to do nonetheless.”
Underlying the approach was Mr. Smith’s feel for the shifting ideological tides — and his sense that shifting with them would serve the company best. One colleague recalled a 2021 presentation to the company’s top executives in which Mr. Smith predicted that the coming wave of tech regulation would be like the wave of New Deal-era financial regulations, and that “the next five years of regulation will define next the 50 years.” Mr. Smith said the company should help shape the new rules and adapt to them rather than resist them.
The break with Microsoft’s scorched-earth past was halting at first.
In 2012, the company hired the political strategist Mark Penn, who produced a negative ad campaign targeting Google’s search engine.
But when a new chief executive, Satya Nadella, took over in 2014, he seemed determined to help complete the reinvention. He dispatched Mr. Smith to negotiate a peace agreement with Google. He hired a mindfulness guru used by the National Football League’s Seattle Seahawks to work with top executives.
Not that Mr. Nadella and Mr. Smith, who had been promoted to president, were averse to competition. They simply went about it differently. Instead of directly undermining fellow tech companies, they drew contrasts between Microsoft’s new high-road practices and rivals’ questionable behavior — for example, by proposing regulations on facial recognition software. Unlike Microsoft, companies like Google and Apple had declined to make their facial recognition versions available for government testing. (Google said the comparison isn’t apt because it does not offer general facial recognition software.)
In 2015, Microsoft, a pioneer among tech companies in hiring temporary workers and contractors to work for less pay and job security than long-term employees, became one of the first tech giants to require large contractors to provide paid time off for workers assigned to its projects.
Amazon appeared to be a particular foil. Mr. Smith noted in his 2019 book “Tools and Weapons” that Amazon had fought a proposed Seattle tax to fund affordable housing the year before, going so far as to stop planning for a building until the tax was lowered. Shortly after, Microsoft made a financial pledge, which eventually reached $750 million, to expand such housing.
(Amazon declined to comment other than…
