Microsoft CEO Satya Nadella comments on Xbox’s Activision deal and the slowing economy

What you need to know Microsoft is trying to buy Activision Blizzard for $69 billion dollars. Activision Blizzard makes popular games such as Candy Crush, Call of Duty, and World of Warcraft. Despite some regulatory jitters, Microsoft was far from overtaking its main gaming competitors such as Sony’s PlayStation and Chinese tech giant Tencent. Nadella also discussed Microsoft’s approach to the weakening economy amid rising inflation.

Microsoft is in the process of acquiring Activision-Blizzard for its Xbox gaming division. The deal is valued at approximately $69 billion dollars and would be a major gain for current shareholders as the valuation far exceeds Activision’s lagging share price.

Activision is known for games like Candy Crush Saga, World of Warcraft, Call of Duty and many more. In the company’s decades-long history, Activision has built up a vast library of content over the years. Despite Activision’s impressive library, it has lost much of its user base in recent years due to fierce competition from companies like China’s Tencent, which owns Riot Games. Activision has also struggled to retain key figures due to repeated scandals, which have left the stock price struggling to recover.

In an interview with Bloomberg, Microsoft CEO Satya Nadella made some new comments about the deal, which is currently subject to regulatory scrutiny in the UK and other territories.

“Of course any acquisition of this magnitude will be subject to scrutiny, but we are confident that we will come out of it.” said Nadel. In response to regulators, Nadella noted Microsoft’s position in the global industry, putting them behind companies like Sony, Nintendo, and Tencent, depending on the metrics used. Noting the recent wave of Sony PlayStation takeovers and regulatory oversight, he joked, “If this is about competition, let’s have competition.”

Microsoft has repeatedly stated its intention to keep Call of Duty on PlayStation forever, but Sony has responded by constantly pushing the idea that it could lose the franchise entirely to Xbox.

(Image credit: Microsoft)

During the discussion, Nadella also discussed Microsoft’s position within the broader economy. Central banks around the world are raising interest rates to counter rising inflation in an effort to squeeze credit and lower consumer prices. The turmoil has compromised borrowing, which will of course hit those in debt and mortgages as employers will also try to cut their own costs through layoffs and less investment. However, Nadella is confident that Microsoft can weather the storm.

“The constraints are real. Inflation is absolutely all around us. I always go back to the point where in an uncertain time, in an inflationary time, software is the deflationary force. [Microsoft is] ensuring that our customers can do more with less. So on the outlook, I’m optimistic about Microsoft’s value proposition. I am optimistic about our stock, but we are not immune to macroeconomic headwinds.”

Microsoft hasn’t resorted to major layoffs just yet, but like many tech forces, they’re probably not off the table. Nadella said Microsoft will join other companies in an effort to “do more with less” as supply chain restrictions, Putin’s aggression in Ukraine and post-pandemic problems continue to fuel the global economy.

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