‘TL,DR. That’s a real thing for them [the big tech companies]. That language pops up. If you’re plodding in as an old-school lawyer you’re going to last three seconds in that room. They’ll just think you’re a wanker.’
So says one prominent external adviser to the ‘Big Five’ tech companies – generally agreed to be Amazon, Apple, Google, Meta and Microsoft. And while that sentiment undoubtedly rings true among those in the sector, do not mistake it for levity.
Frivolous startups they are not. Collectively, the Big Five represent some of the biggest, most sophisticated and highest grossing businesses in the world. This has its legal risks, particularly when considering their influence. In July 2022, Meta’s Facebook platform alone attracted nearly three billion active monthly users, which necessitates navigating a minefield of data, privacy and other legal issues.
Says Emma Wright, head of tech at Harbottle & Lewis: ‘Years ago, TV was the thing that was seen as controlling the hearts and minds of people but now people are suddenly waking up to technology being the platform for transmitting content to huge numbers. They just didn’t think about it like that when these things were launched.’
‘The Online Safety Bill is not exactly easy reading – there’s a lot of complexity in the Bill, and I think that will cause problems down the line.’
David Barker, Pinsent Masons
It is no surprise therefore that the Big Five have massive regulatory targets on their backs, with new legislation in the UK, EU and beyond being generated constantly. Not to mention a non-stop slew of competition litigation these companies must contend with.
Another established TMT adviser is grave on the matter: ‘Anybody who thinks they’re going to get somewhere with these businesses by somehow being funky, no you won’t. You will just quickly be found out as not as bright as those instructing you.’
‘The Microsoft curve’
Maybe the best way to try and comprehend the sheer scale of regulatory scrutiny the Big Five face is to look at the bookshelf of Oliver Bray, RPC senior partner and TMT specialist. Tomes of legislation stand back-to-back, and Bray can’t help but laugh when asked to precis the regulatory environment. ‘I can read them out if you like? There’s the Digital Markets Act, Digital Services Act, Omnibus Directive, Accessibility Act, AI Act, NIS Directive, NIS II, Digital Content Directive, e-Privacy Regulation, Data Act, Data Governance Act et cetera… and that’s just from an EU perspective. Plus they all interweave!’ He insists he has read every single page: ‘You can’t blag this stuff.’
To further illustrate, the UK’s prospective Online Safety Bill, a cause of much debate in tech circles, has explanatory notes numbering 123 pages. The Bill itself is 213 pages. ‘It’s not exactly easy reading – there’s a lot of complexity in the Bill, and I think that will cause problems down the line’, David Barker, head of Pinsent Masons’ TMT disputes team, quips. Clive Gringras, CMS’s head of TMT and regular adviser to Microsoft, adds: ‘A tech lawyer saying they don’t do regulation is like saying: “I’m a human but I don’t do oxygen. It’s only 21% of the air. I do nitrogen, I just don’t do oxygen.”’ (For more on specific legal and regulatory challenges the Big Five face, see sections, below.)
‘They are some of the largest businesses in the world. The last thing they want is a lawyer trampling over their carefully constructed communication with some ill-judged remarks.’
David Cran, RPC
You would be forgiven for thinking that these tech giants would therefore be preoccupied with aggressively lobbying regulators to achieve better outcomes, but external counsel paint a more relaxed picture. One TMT partner comments: ‘They will all have public policy functions that the lawyers work with, talking to government. But the objective of that is to try and help government to arrive at something which is sensible and workable, rather than just lobbying outright against it. Being aggressive is not really on the agenda for big tech. They’re not a petulant child saying they don’t want to go to school, they just want some influence on how the regulation looks.’
Another partner describes what is well-known in the industry as ‘the Microsoft curve’, the degree to which the Big Five become more collaborative with the regulators over time.
‘Basically Microsoft got its antitrust issues out of the way early in the late 90s and early 2000s, and at the time they approached it by sort of saying: “Who the hell are you?” to the authorities. And then over the years they realised the regulation isn’t going away.
‘Now Microsoft has by far the best relationship with the regulators, it’s very well respected in the Competition and Markets Authority (CMA) and other places because it’s a bit more grown up. It accepts the regulators are there and tries to work with them.’
On this virtual spectrum Google is seen as closest to Microsoft, having also gone in early with its regulatory dealings. Apple and Amazon are somewhere in the middle, with Meta at the other end of the extreme. ‘Meta is the least sophisticated, and therefore unsurprisingly has an awful relationship with the CMA and gets terrible results out of its cases,’ the partner says.
With this regulatory landscape in mind, it is clear why Amazon, Apple, Google, Meta and Microsoft all possess large, international and sophisticated in-house teams. It is also no wonder these companies, and their external counsel, largely keep their cards close to their chest (only Amazon and Microsoft agreed to participate in this feature). David Cran, RPC’s head of IP and tech, says: ‘These businesses are at the forefront of our daily lives and technological change. Given they are some of the largest businesses in the world, they have very carefully crafted messages they want to get out to their users. The last thing they want is a lawyer trampling over that carefully constructed communication with some ill-judged remarks.’
So clearly discretion is a desirable trait, but what else makes a good external adviser to these tech giants? Patricia Christias, assistant general counsel and head of legal for Microsoft UK, outlines her approach: ‘I may look to outside counsel to provide either expertise on discrete legal issues or to provide support and additional resource and resilience on projects. I expect them to have an appreciation of Microsoft’s business and to understand the strategic legal, regulatory and policy context in which we operate.’
There is an argument that the smaller, more niche firms that have always done tech work provide a truer understanding of the market. Says Mark Watts, TMT partner at Bristows: ‘Some of the big firms that do tech do it very well – but you can sometimes tell it’s not their MO as much as those firms who set up around a particular sector. For us, it influences everything, from our BD to our brand.’ Watts’ colleague, contentious media and data partner Alex Keenlyside, adds: ‘Media law issues were considered quite niche for a long time. When social media exploded it became bigger business and the larger firms got interested. Tech companies look for firms who can advise on things like: is the content defamatory? What about the user’s right to be forgotten? What are the data protection implications? A Magic Circle firm ten years ago wouldn’t have had anybody who specialised in some of those areas, whereas some of the smaller firms were much better placed.’
However, even Keenlyside concedes that there is not much evidence supporting the idea that the Big Five exclusively stick to their original advisers, particularly as their legal requirements correspond with their typically frenetic growth. And as Tom Smith, partner at Geradin Partners and former CMA legal director, notes: ‘In my area it’s pretty tough even for the big tech firms to stay on top of it all. I read somewhere that there’s something like 100 cases worldwide active against the four tech firms. That’s just in competition law! They need a massive roster of law firms so they can throw people at it.’
‘It was a new client. I debated: “Do I wear a tie? They’re kind of at the corporate end…” I walked in and thought: “Shit.” By that point it’s too late, you can’t
start undressing.’
Tom Smith, Geradin Partners
Others take the view that as global businesses faced with the development of competing regulatory frameworks, a joined-up global service is becoming increasingly valuable. Argues Gringras: ‘If a law firm comes to a client and says: “Here are the laws in Vanuatu, and here are the laws in Venice and here’s the law in Vienna”, the in-house teams are going to say: “This doesn’t help me, I need to deliver it once, I can’t differentiate my delivery across borders.” And so, I would say this, but it’s why I voted for the [CMS] merger six years ago – you have to be in an international law firm.’
In any case, firms regularly cited as serious tech players range from sector-focused challengers like RPC, Pinsent Masons, Fieldfisher, CMS, Osborne Clarke and Bird & Bird; Magic Circle and US outfits including Cleary Gottlieb (partners Jackie Holland and Paul Gilbert were widely endorsed), Clifford Chance, Baker McKenzie, Allen & Overy, Gibson Dunn, Cooley and Linklaters (tech sector co-head Verity Egerton-Doyle was singled out for praise); through to boutique firms like Bristows, Geradin Partners and Ignition Law. An eclectic mix that suitably represents the smorgasbord of legal issues these big tech beasts face.
Tie die
It would be remiss not to highlight a faux pas or two committed by lawyers in the tech sector. Think on them as cautionary tales. Canvassing advisers, it seems a golden rule is to stay on top of your software – using a Microsoft PowerPoint presentation with Google is bound to go down as a howler.
Of great amusement are the sartorial quandaries, with ‘to tie or not to tie?’ proving a particularly tricky question. Smith recalls: ‘I actually put a tie on one Friday and I was the only one in the meeting wearing one… I don’t know why I did that! It was a new client and it was quite an important meeting with senior people. I debated: “Do I wear a tie? They’re kind of at the corporate end…” I walked in, scanned the room and thought: “Shit.” By that point it’s too late, you can’t start undressing.’
Another partner remembers: ‘I did once go to a meeting with a big tech company with a guy who wore a suit. He looked so stupid.’
However, it is clear that these companies should not be underestimated for their lack of formality. Says John Cassels, co-head of the regulatory group at Fieldfisher: ‘The Big Five are sophisticated buyers of legal services and they will smell straight away if someone doesn’t have the background legal heft and is winging it.’
Remarks another prominent tech partner: ‘I have seen people come a cropper on that front. They go to meetings with these tech clients, who might actually look like a bit of a slob – pair of scruffy jeans and a t-shirt. That can create a false sense of ease among some. And then 20 minutes into the meeting you can see the lawyer fundamentally reset and think: “Oh my god, they’re really bright and asking me hard questions…” What did you expect?!’
TL,DR: Basically, if you want to be a good legal adviser to big tech companies, you have to really know your regulation, keep jargonistic legalese to a minimum and avoid wearing a tie.
tom.baker@legalease.co.uk
megan.mayers@legalease.co.uk
Return to TMT Yearbook contents
Tech giants under the spotlight
Amazon
Law firms used: Bristows, Covington, Sullivan & Cromwell, Taylor Wessing, Wachtell, Lipton, Rosen & Katz
Such is the scale and urgency of Amazon’s regulatory challenges, when new chief executive Andy Jassy took over the role last year, Politico marked the occasion with an article titled ‘7 problems Amazon’s new CEO must deal with in Europe’.
And there is little doubt that Jassy’s in-tray will have been groaning. As with its Big Five peers, Amazon, which now reaches beyond its traditional online marketplace business into fashion, groceries, insurance, Prime entertainment and more, faces a raft of legal and regulatory scrutiny.
UK legal director Alex Simpson gives an overview of his workload: ‘Amazon’s focus drives an incredible amount of interesting and rewarding legal work, ranging from operational, contractual and supply chain initiatives through to working with policymakers and regulators on opportunities to strengthen the law and encourage faster progress on sustainability and net zero initiatives.’
Among recent headline issues, in October a court in Moscow fined Amazon four million rubles (just over £56,000) for allegedly failing to remove content related to suicide and drug use, a first for the jurisdiction. Amazon’s video streaming platform, Twitch, was also fined eight million rubles (nearly £113,000) for reportedly failing to remove unlawful content.
Given the geopolitical situation it is easy to dismiss the Russian punitive action as a rejection of western influence, however, the case provides a potential preview of the UK’s prospective Online Safety Bill (OSB) and the EU’s equivalent Digital Services Act (DSA). Both pieces of legislation are aimed at regulating online content, with the UK’s Bill particularly controversial among lawyers for its intention to prevent ‘lawful but harmful’ content, colloquially referred to among advisers as ‘lawful but awful.’ (For more on the OSB and DSA see sections on Meta and Google, below.)
David Barker, head of Pinsent Masons’ TMT litigation team, explains: ‘A good example of lawful but harmful is content which encourages behaviour associated with eating disorders. Generally this type of content is not unlawful, but the Bill is looking to control it, particularly children viewing it. The Bill would require companies to take proactive steps to prevent content like this appearing, which is a significant shift from the current position.’
Another EU regulatory issue saw Amazon in July seeking to end a probe from the European Commission into its use of ‘non-public data’ via a series of commitments. The Commission alleged that due to Amazon’s dual position as both a marketplace and a retailer in that marketplace, it could gain an unfair advantage by making use of non-public data of rival sellers. It also raised Amazon unduly favouring its own retailers in its ‘Buy Box’ (which prominently displays the seller and allows users to conveniently complete a purchase in one click) and Prime (a subscription service which gives customers free shipping and other benefits).
To end the investigation, Amazon has pledged to give other sellers greater access to its Buy Box privilege and has said independent retailers can take advantage of its Prime service without having to use Amazon’s logistics business. As of July, the Commission is seeking feedback from the market on Amazon’s proposals.
In July 2021 the UK’s Competition and Markets Authority (CMA) announced it was going to investigate both Amazon and Google ‘over concerns that they have not been doing enough to combat fake reviews on their sites’.
It is no surprise then that Simpson expects his external counsel to be proactive. He says: ‘The best lawyers look around corners and are creative problem-solvers for their clients.’ But he says the relationship goes both ways: ‘We work closely and in partnership with a range of law firms that provide exceptional expertise and share our values and customer focus. They are all undeniably experts in their field. By working with Amazon, their lawyers also get the opportunity to work on some of the most innovative and interesting legal work around. We also help train their lawyers by offering them an opportunity to work from time to time with the team in-house at Amazon.’
Away from regulation there is certainly interesting legal work to be found. Simpson recalls supporting the UK government during the pandemic by using Amazon’s logistics expertise to help deliver home-testing kits. ‘This was a unique project, with distinctive challenges we had never faced before,’ he says. ‘We needed to work out where to stock the kits, how many we could deliver each day, and how quickly. We actually opened an entire fulfilment centre in Darlington a month early to stock the kits and created an entirely new delivery and logistics model from scratch.’
Simpson’s team went about re-engineering contracts and existing frameworks, engaging with the data privacy regulator (the Information Commissioner’s Office) and standards bodies to create the new model. Overall, the anecdote provides a refreshing optimism around the role big tech can play in society. Simpson concludes: ‘The legal team worked incredibly quickly to get these new contracts in place, and to ensure the service was up and running just a few days after it was originally proposed. It would have been very easy for us as a legal team to say the project was too risky. But this was an incredibly special situation and we really wanted to help.’
Apple
Law firms used: Freshfields Bruckhaus Deringer, Gibson Dunn, Paul Weiss
Apple is one of the more discreet Big Five tech companies, with not much in the public domain about its advisers. Gibson Dunn is perhaps the most well-known of its external counsel, due to its advisory role on a couple of competition litigation cases in the UK’s Competition Appeals Tribunal (CAT).
One case hit the headlines in the summer as consumer rights activist Justin Gutmann launched a roughly £750m claim in the CAT related to the ‘throttling’ controversy. In 2017, Apple released an undocumented battery management system via an update which slowed down the performance of older iPhones to prevent them from abruptly shutting down, a process known as throttling.
Gutmann alleges that Apple’s actions were not disclosed to consumers and were designed to obscure the fact that older iPhone devices could not handle newer software demands. Gutmann is represented by Rodger Burnett, director of London firm Charles Lyndon, while Apple is yet to announce its counsel.
Gibson Dunn has been instructed on a different claim though, namely the App Store claim brought by Dr Rachael Kent on behalf of nearly 20 million consumers. Kent alleges that Apple’s iOS operating software and its pre-installed proprietary store (the App Store) amount to an abuse of dominant position, with Apple restricting rivals from distributing apps. The opt-out claim estimates a loss in the range of £535m to nearly £1.5bn.
The claim is funded by Vannin Capital, with Hausfeld partners Lesley Hannah and Luke Streatfeild advising Kent. Apple has drafted in Gibson Dunn for its defence.
In another prominent case, Gibson Dunn and Paul Weiss were enlisted by Apple to defend a claim brought by Fortnite developer Epic Games, which challenged Apple on its policy of not allowing other in-app purchasing methods besides the App Store. The case was brought in August 2020 with a judgment in September 2021 finding largely in Apple’s favour, albeit the ruling prohibited Apple from stopping developers from informing users of other payment systems within apps.
The wider App Store issue is being closely monitored by UK and EU regulators, with the EU having already passed its Digital Markets Act (DMA) in July 2022 and the UK intending to introduce its own equivalent, to be enforced by the Digital Markets Unit (DMU) in quick order. One of the DMA’s aims is ensuring that ‘gatekeepers’ (online platforms considered to have significant economic influence) allow users to install third-party apps and app stores on all devices. The UK’s legislative equivalent is set to have similar targets.
Tom Smith, partner at Geradin Partners and former Competition and Markets Authority legal director, describes the DMA as ‘a good piece of legislation’ but warns it contains ‘concepts that will take years to figure out what they mean in practice’.
He adds: ‘The EU is starting its process of designating gatekeepers, and the prospective gatekeepers are hiring lots of people. I don’t know how much the EU gatekeepers will challenge whether they fall within the law or not. It’s going to be tricky for Google Search for example to say it’s not a gatekeeper, but they might choose to fight, and there are other products where it is less clear-cut.’
CMS’ head of TMT, Clive Gringras, says the DMA and upcoming Digital Services Act are ‘so big’ that the European Commission is seeking to add 50 people just to monitor these providers.
And according to Gringras, the ever-expanding scope of legal complexity for the Big Five tech companies shows no sign of stopping: ‘In-house teams in the largest tech companies have not only got their business as usual, keeping the server plates spinning on the hard drives, they’ve got the business guys coming in and saying to them: “Hey, we want to move into financial services, we want to do pharmaceuticals, we’re thinking of moving into travel. Oh yeah, we’re also thinking of building a car, let’s talk about autonomous vehicles – are there any regulations around automotive?” This means they are going to have to broaden the horizons of their legal experts.’
Google (Alphabet)
Law firms used: Baker McKenzie, Bristows, Pinsent Masons, RPC, Slaughter and May
Google, wholly owned by Alphabet, is another example of a big tech player tight-lipped about its legal work and advisers. However, like the rest of the Big Five, there is some work it cannot keep out of the press.
Perhaps the most prominent case has been the mammoth consumer data protection claim brought by Richard Lloyd, former executive of Consumers International and Which?, on behalf of four million Apple iPhone users. The claim, which was backed by litigation funder Therium, alleged that Google breached privacy laws as a result of cookies used by Google to track some of their internet activity for commercial purposes. If successful, it would have changed the game for data privacy disputes.
Ultimately, Lloyd failed in 2021 when the Supreme Court unanimously ruled in favour of Google, which was represented by Pinsent Masons. The court found that proof of individual loss was required for a class action under s19.6 of the Civil Procedure Rules.
The risk is still alive and kicking, says Sam Ward, commercial and competition litigator at Clifford Chance: ‘Data class actions are more up in the air, but they are a real threat. It [Lloyd v Google] has really left unclear what those large-scale data claims will look like. I think the door is still open, but claims may have to be shaped differently.’
Google remains a target for group litigation. In fact, the quelling of data class actions after Lloyd v Google left claimant firms and litigation funders seeking other ways to deploy their war chests. In the UK, this has meant packaging claims for the Competition Appeal Tribunal (CAT), which allows opt-out claims.
In September 2021 law firm Geradin Partners announced that it is bringing two claims backed by litigation funder Harbour, one in the UK and one in the Netherlands, on behalf of publishers which it alleges suffered harm from Google’s anti-competitive conduct with ad tech.
In July 2022, the CAT also granted a collective proceedings order for a group claim relating to alleged abuse of dominance relating to the Google Play Store, in which RPC is defending Google in this claim brought by competition boutique Hausfeld.
Beyond litigation, upcoming regulations mean that competition and data issues are only going to increase for Google and its peers. Explains John Cassels, competition partner and co-head of Fieldfisher’s regulatory group: ‘Antitrust rules as they stand are ex-post control so unless they’re engaging in a merger or are dealing with allegations of bad behaviour, they haven’t been investigated. But what’s happening now, under the Digital Services Act, Digital Markets Act and other antitrust developments is that antitrust control is moving to: “We think you have a special responsibility and we’re going to create a lot of rules that will apply before you do anything.”’
Meanwhile, the pressure of data regulations and transparency challenge Alphabet’s business model, which rests heavily on digital advertising revenue. Notes Cassels’ colleague, Fieldfisher’s co-head of technology and data, Simon Briskman: ‘It has to make advertising work, otherwise it would have to charge for the service, and that’s the payoff. The question is how you do that in a way which is not just legal, but also keeps your users on your platform and comfortable with what you’re doing? That’s a constant balancing act for all the Big Five.’
Regulatory clashes and collaboration are not new to Google – after all, your brand does not become recognisable enough to be synonymous with its function without attracting regulatory attention. But for Google’s legal team, and its advisers, the challenge is to be keep up with the changing landscape.
As CMS’s Clive Gringras summarises: ‘Do you think that in five years’ time we’re going to have more technology in our lives, the same, or less? What’s your bet? Of course, it’s more. Do we think there’s going to be less competition between technology companies? No, they’re going to keep competing with each other. Are they going to keep innovating? Yes, of course they are.’
Meta
Law firms used: Bristows, Fieldfisher, Hogan Lovells, RPC, Slaughter and May, Weil
With market sentiment placing Meta as one of the Big Five lagging behind the so-called ‘Microsoft curve’, perhaps its recent regulatory uphill battle should come as no surprise.
In 2018, Facebook made headlines for the Cambridge Analytica data breach scandal, which saw it hit with fines from several regulators, including a £500,000 fine in the UK, a cringeworthy deposition of chief executive Mark Zuckerberg before the US Congress and a US class action, which recently settled on undisclosed terms.
Since then, the company has rebranded as Meta but its regulatory scrapes and public relations crises continue. It is currently grappling with a £2.3bn group action brought on behalf of 44 million UK Facebook users which alleges that Facebook breached the 1998 Competition Act by exploiting users’ data. Beyond the consumer risk, the heft of the UK competition regulator has been seen in the Competition and Markets Authority’s October 2022 decision to order the sale of gif search engine Giphy.
However, some of Meta’s biggest challenges still lie ahead as regulations targeting big tech mount up. The EU regulations Digital Markets Act and Digital Services Act, which were both approved in 2022, and the UK’s Online Safety Bill, which is expected to be passed in 2023, will all impose new responsibilities and require onerous changes to Meta’s businesses. Social media giants have been pulled into the spotlight following the death of Molly Russell, which an inquest published in September 2022 highlighted the negative effects of online content, including from Instagram and Pinterest.
The UK bill is currently in a parliamentary quagmire, partly the result of the conveyor belt of new prime ministers, and partly as it navigates controversy from all angles. Says Frankie Everitt, a senior associate in Fieldfisher’s public and regulatory team: ‘On the one hand, you’ve got a bunch of child protection charities saying that the longer this takes to get across the line, the more children will be harmed online, and on the other side you’ve got people saying this entire bill needs to be rewritten for freedom of speech reasons and human rights lawyers saying it’s a totally unworkable piece of legislation.’
Bristows contentious media and data partner Alex Keenlyside is sceptical of a quick fix: ‘Stopping bad actors without imposing unworkable monitoring obligations on the tech companies is an enormous challenge. It’s terribly complicated, and some would argue they’re trying to do too much. I can’t immediately think of a piece of legislation that has ever dealt with such a large issue.’
Meta, like the other four tech giants, cannot afford to wait around and is calling on trusted advisers to assist in preparing for these and future regulations. Explains CMS’s Clive Gringras: ‘Ultimately, you need to understand the mischief that the regulator is getting at. When we’re looking at these regulations, we can see what their concern is and see what they’re trying to do. I don’t need to read the Dangerous Dogs Act to figure out why they said certain types of dogs need a muzzle. I haven’t read it, but my suspicion is that it didn’t say that you need a muzzle on a chihuahua.’
As to whether the regulations will hit the mark first time is yet to be seen, but the forced increase in focus on regulation could just get Meta there sooner rather than later, argues Dessi Savova, head of Clifford Chance’s European tech group: ‘It is a challenge but also an opportunity. Regulation has now become part of the strategy of all big players globally because to some extent, they have no other choice, but also because it’s about taking a competitive advantage and ensuring that they win the war for the consumers’ trust, because that’s exactly what is at stake.’
Microsoft
Law firms used: CMS, Covington, Osborne Clarke, Reed Smith
The elder statesman of the Big Five, Microsoft began its regulatory entanglement back in the 1980s, before there was widespread acknowledgement of the influence of its technology.
In 1989, the US Federal Trade Commission (FTC) flagged an agreement between Microsoft and IBM that it viewed as potential collusion, leading to Microsoft having to clear its name in the early 1990s. But in 1993, the Department of Justice (DoJ) opened its own investigation, which concluded in 1994 with Microsoft agreeing not to tie other Microsoft products into the sale of its Windows operating system.
However, its insistence on packaging its Internet Explorer web browser with Windows in the following years (Microsoft argued it was a feature rather than a product) drew the DoJ’s gaze, and in 1998 the DoJ brought an antitrust suit. The case concluded that the only suitable solution to prevent Microsoft from running a software monopoly was to break the company up into two parts, one responsible for the operating system and the other to produce its software.
In 2001 this was revised to a lesser penalty requiring Microsoft to share its application programming interfaces with third-party companies, but the series of ordeals clearly left a mark. As outlined by ‘the Microsoft curve’ theory mentioned in our overview (see page 21), the experience provided Microsoft with a chastening education on dealing with the law. There is a consensus that it is better for it. As Emma Wright, head of Harbottle & Lewis’ technology, data and digital group, says: ‘It is more mature than the other tech companies. It had its moment in the early 2000s, so it has been through this all before.’
Patricia Christias, Microsoft’s assistant general counsel and head of legal for the UK, says that her legal team sits within the company’s ‘corporate external and legal affairs’ (CELA) function, which engages with a range of external stakeholders, including regulators, think tanks and industry groups.
She is bullish on how this informs her expectations of external counsel: ‘I firmly believe that creative and effective legal advice cannot be given in a vacuum and, to be most effective, solutions require not only a deep understanding of tech and innovation but also a wider appreciation of national and global developments.’
Microsoft will be hoping for a favourable outcome in its planned $68.7bn buyout of Activision Blizzard, a developer well-known for its popular Call of Duty video game series.
The synergies for Microsoft are obvious, given its strong position in the gaming market via its line of Xbox consoles, but this has understandably raised regulatory concerns on an international basis.
In the US, the FTC reviewed the transaction, with high-profile senators Elizabeth Warren, Bernie Sanders, Cory Booker and Sheldon Whitehouse expressing concern over the implications for workers. They said the merger should be opposed ‘if the transaction is likely to enhance monopsony power and worsen the negotiating position between workers and the parties.’
And in the UK, the Competition and Markets Authority (CMA) is leading its own probe which is set to conclude before March 2023. Among other issues, the CMA is seeking to ensure the acquisition does not lead to Microsoft limiting the availability or increasing the price of Activision software on other consoles.
For Christias, international scrutiny adds further complexity to her role: ‘Many of the issues on which we are advising raise cross-jurisdictional issues or are informed by developments in other countries or international bodies. This is why we develop industry expertise as well as engage with colleagues across the global business so that we can provide the best-informed and most effective and creative solutions to support Microsoft’s vision.’
And while external counsel will do well to stay on top of such global developments, Christias has a particular drive for diversity and inclusion, launching the Law Firm Diversity Programme (LFDP) in 2020. The programme seeks to promote the D&I aims of both Microsoft and its partner firms, with Microsoft spotlighting those firms which achieve certain stated goals.
For the 2021 programme, CMS and Reed Smith were highlighted for their efforts. CMS was named Microsoft’s ‘LDFP top performer’ after impressing on a variety of metrics, meeting seven out of Microsoft’s eight diversity targets. Among the highlights: the number of hours that diverse employees from CMS spent on Microsoft matters increased 12%, reaching 63.1%. Overall diversity of CMS’ management committee also saw an increase of 7.7%, to meet the target of 50% diverse.
Meanwhile CMS and Reed Smith shared the accolade of ‘most innovative law firm’ for respective racial diversity action plans. Reed Smith’s Racial Equity Action Plan (REAP) seeks to increase black leadership in the firm 30% by 2024.
D&I is clearly a key priority for Christias, who concludes: ‘On any particular engagement, my team expects to work with teams that promote lawyers of different backgrounds and experience to offer opportunities for all. In turn, we aim to be realistic on deadlines so as not to inadvertently exclude lawyers who work flexibly and we encourage early-in-career team members to take an active role in meetings.’