Despite an extensive regulatory investigation in the U.K., Microsoft Corp. Satya Nadella said the company is “confident” that it can get regulatory approval to buy Activision Blizzard Inc. for $69 billion. Of course, any acquisition of that size will go through scrutiny, but we’re confident we can do it,” he told Bloomberg Television. Investor skepticism about the deal and Nadella’s prediction are at odds with each other.
Activision rose Thursday, dipping into the tech market. Still, the business closed more than 20 percent below Wednesday’s offer price, at $75.32, indicating widespread skepticism that Microsoft can pull off the deal. According to Nadella, Microsoft is the fourth- or fifth-largest competitor in the video game industry, depending on how you count. Sony Group Corp., the industry leader, is in the business of acquiring smaller competitors. So he said: “Let’s have a competition when it comes to competition.”
After CMA12 raised concerns that the acquisition could reduce competition in the console, subscription and cloud gaming sectors, the U.K. Competition and Markets Authority announced earlier this month that it had decided to launch a more extensive investigation. Joining forces with Activision would make Microsoft the third largest game company in the world. Activision owns popular game properties including Call of Duty, World of Warcraft and Guitar Hero.
Nadella was also encouraged by Microsoft’s ability to help its customers survive a slowing economy and rising inflation. Inflation is a constant presence in our society. So the constraints are very real, he said. In an era of inflation, “I always come back to the fact that software is a deflationary force,” he said. Nadella said Microsoft is in the business of “ensuring that our customers can achieve more with less.” “As a result, Microsoft’s value proposition is one that I have high hopes for the future. While I have high hopes for our piece of the pie, I recognize that we are not immune to the effects of macroeconomic headwinds.”
According to a Bloomberg News article earlier this year, Microsoft is putting off hiring and removing many unfilled jobs, especially in Azure Cloud, Windows and Office. Despite losing 1270000 employees during the pandemic, Nadella promised to continue expanding in some areas. Then he stated, “We’re going to be more thoughtful.”
Microsoft will “take the same medicine that achieves more with less,” Nadella said. While many of our companies are thriving and preparing for future expansion, we also have to control the economy as a whole. He expressed confidence that the company will be successful as it expands and becomes more productive. (Activision stock update in the third paragraph.) Bloomberg L.P.
