Like all of us, Microsoft got really into gaming over the pandemic. The tech company announced yesterday that it would acquire video game giant Activision Blizzard for nearly $70 billion.

This deal warrants a gasp usually reserved for the first time you see a Six Flags coaster IRL. Activision Blizzard would be the company’s largest acquisition by far; in fact, by deal size it’s roughly equivalent to the sum of Microsoft’s five previous largest acquisitions combined (LinkedIn being the biggest of those, with a $26 billion price tag).

• An Activision Blizzard takeover would also be the biggest deal in the history of gaming, easily topping Take-Two’s purchase of Zynga for $12.7 billion last week.

With the help of Activision’s impressive portfolio of titles including Call of Duty, World of Warcraft, Overwatch, Diablo, and Candy Crush, Microsoft will try to galvanize its monthly subscription business, Xbox Game Pass, as the “Netflix for games.”

But its ambitions are bigger than that

With this deal, the company best known for its office software is lobbing a direct challenge to Meta CEO Mark Zuckerberg in the race to build virtual worlds described popularly as the “metaverse.”

And the key that will unlock the metaverse, Microsoft’s execs believe, is video games.

• Microsoft Gaming boss Phil Spencer has argued that the quickest route into the metaverse is through infrastructure that game platforms like Minecraft have already created.
• To build out more of its foundation, Microsoft has spent $10+ billion since 2014 buying over a dozen game studios before going after the biggest target in Activision.

The takeover doesn’t come without baggage, or hurdles. In July, the state of California sued Activision over allegations of sexual harassment, pay inequality, and all-around “frat boy culture.” Much-criticized CEO Bobby Kotick, who allegedly knew about at least some of the issues, is expected to step down after the deal is finalized.

Plus, Microsoft could find itself in a place it has mostly avoided of late: in the antitrust hot seat. Regulators who have scrutinized Big Tech peers like Alphabet, Meta, Apple, and Amazon could give Microsoft trouble as they look to rein in anti-competitive consolidation in the tech industry.

+ For a laugh: Here’s a goofy TikTok about the acquisition.—MM

Piece of advice: Download The Last Duel at home, not at the airport. Following a last-minute appeal from US transportation companies, AT&T and Verizon both agreed on Tuesday to temporarily delay their deployment of 5G services near some major airports.

The announcement came one day after CEOs from major US airlines Delta, American, Southwest, and United—along with shipping companies like UPS and FedEx—sent a letter to the Biden administration warning that the 5G rollout would cause chaos, affecting both commercial and cargo flights.

• Emirates Airlines announced Tuesday that it was suspending service to nine US cities until further notice over the rollout.

It’s the latest in a dispute between the industries that’s gone on longer than the Dunkin’ line at LaGuardia. The airline executives said in their letter that upon further review, proposed measures the two sides agreed to earlier this month were not sufficient to prevent interference between crucial airplane instruments and 5G’s C-band frequencies.

Friendship over: Cell carriers, who’ve spent billions on 5G tech, are not happy about the delay. In a statement, AT&T criticized both the aviation industry for not utilizing “the two years they’ve had” to plan for 5G, and the FAA for its “inability to do what nearly 40 countries have done” in safely deploying the technology.—MK

The US’ Omicron wave began as we were putting up holiday decorations, and it appears to be in retreat as we take the last of them down.

New Covid cases have peaked in US regions that were hit hardest by the highly contagious variant, like the Northeast.

• In New York City, the 7-day average of daily new cases has fallen to less than 20,000 from a high of almost 43,000 earlier this month.
• Washington, DC, case numbers are down 20% over the last 14 days.

Still, because hospitalizations tend to lag case growth by a few weeks, health care facilities are still treating more Covid patients. The average number of Covid hospitalizations has jumped 54% in the last two weeks, to 157,000.

Is the endgame near?

Since Omicron wiped out Delta but appears to be less dangerous, experts have speculated that O’s dominance could lead to Covid’s endemicity, or what Dr. Fauci described as the virus being “present at a level that does not disrupt society.”

Thanks to vaccines, tests, and new at-home treatments, Pfizer’s CEO Albert Bourla predicted, “We will soon be able to resume a normal life,” in an interview with French newspaper Le Figaro.

Fauci, speaking at a panel on Monday, sounded a bit less certain, saying he hopes endemicity is coming shortly, but he isn’t ruling out the emergence of another variant that can avoid people’s immunity.—NF

Stat: Bankers are making bank. Goldman Sachs said it raised its pay 33% last year to a total of $4.4 billion in extra compensation. JPMorgan spent an extra $3.6 billion on comp in 2021 and Citigroup shelled out an additional $2.9 billion. These raises are seriously denting bank profits, but may be necessary to retain talent in this inflationary and Great Resignation-y environment.

Quote: “The next 1,000 unicorns won’t be search engines or social media companies, they’ll be sustainable, scalable innovators–startups that help the world decarbonize and make the energy transition affordable for all consumers.”

BlackRock CEO Larry Fink, in his closely read annual letter, argued that the decarbonization of the global economy—and not the metaverse or crypto—will create the “greatest investment opportunity of our lifetime.”

Read: How the humble hardware store orders things, neighborhoods, and material worlds. (Places Journal)

We’ll find out how good Daniel Radcliffe’s polka face is when the Harry Potter actor plays Weird Al Yankovic in an upcoming Roku original biopic of the singer/comedian.

Yesterday’s announcement highlights both Roku’s push into original programming and Weird Al’s weirdly enduring appeal as an artist.

• Yankovic, who’s known for his song parodies like “White & Nerdy,” “I Love Rocky Road,” and “Amish Paradise,” is the biggest-selling comedy recording artist in history and has scored 5 Grammys.
• He said he was “thrilled” that Radcliffe would play him on the screen. “I have no doubt whatsoever that this is the role future generations will remember him for,” Yankvoic predicted.

Roku, meanwhile, is trying to expand beyond just serving as a platform for other streaming apps. It launched the Roku Channel in 2017 to compete with the Netflixes of the world, and Weird: The Al Yankovic Story will be its first original biopic.

Final fun fact/trivia: Weird Al is one of only five artists with a Top 40 hit in each of the four decades from the 1980s through the 2010s. Can you name the other four? Answer at the bottom of the newsletter.—NF

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Cool campaign: Twitter is putting up billboards of famous people alongside their aspirational tweets. Get hyped.

The ultimate morning routine: 1) Wake up and throw on your Morning Brew hoodie 2) pour steaming hot coffee into your Brew mug 3) cozy up with your Morning Brew fleece blanket.

Volcano links: Learn more about the remarkable volcanic eruption from last weekend with some photos, an explanation of why it was so violent, and how internet disruptions have complicated relief efforts.

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Word Search: Remember when the US Mint made special quarter designs for every state? Relive the glory in today’s puzzle.

It's a big deal

In light of the Microsoft news, can you name the largest acquisitions (by dollar amount) by the following companies?

1. Amazon
2. Disney
3. Meta
4. Apple
5. Netflix

Close your eyes and imagine how you’d spend $1,000 on improving your WFH setup. A second monitor? An ergonomic mouse? House plants to keep you company?

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1. Whole Foods for $13.7 billion
2. 21st Century Fox for $71.3 billion
3. WhatsApp for $19 billion
4. Beats for $3 billion
5. The Roald Dahl Story Company for more than $700 million

Weird Al trivia answer: U2, Kenny G, Madonna, Michael Jackson