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Our most recent reminder of this disconcerting truth: Bob Diachenko, a self-described cybersecurity enthusiast who works for an IT development firm, discovered(Opens in a new tab) an online database containing information on thousands of US voters. The apparently misconfigured database, which belonged to a Virginia-based robocalling firm, reportedly included voters' names, addresses, phone numbers, and political affiliation, along with other personal information.
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Almost everything that big tech is doing today, from copycatting rivals to establishment platform dominance to tying products together to predatory rebating, Gates did, turning his small but prosperous software company into the biggest firm in the world in a little over a decade. For instance, to get access to personal financial data, Microsoft sought to acquire Intuit in 1995. In 1997 Microsoft official Nathan Myhrvold talked about how the firm\u2019s plan was to take a \u2018vig\u2019 - a mobster term for a share - off every transaction online. Gates was so overt that Microsoft in the 1990s had a meeting with venture capitalists where firm executives explained where they could invest, and what parts of the internet it would reserve for itself.
And this brings me to Microsoft\u2019s proposed acquisition of gaming firm Activision for $69 billion, a large merger, though when compared to the size of Microsoft, something quite piddly, at 2-3% of its market cap. Since Nadella and Smith took over from Gates, Microsoft has been a merger powerhouse. It acquired 15 firms just last year, in everything from cybersecurity to cloud computing to online advertising to video games. It has been on a buy-out tear in every division, including games. Microsoft has something like 30 game studios. Meanwhile, Activision itself is a gaming roll-up, it has since the 1990s acquired about 25 game studios, coming together with gaming giant Blizzard in 2008. Microsoft-Activision would be a merger of mergers.
The goal here is the vertical integration of the industry into a series of walled gardens, similar to the transformation of Hollywood from studios separated from TV networks and movie theaters, to a Hollywood of streaming giants where production and distribution are contained by the same dominant firms. Such an arrangement looked great at first, with Netflix having oodles of content, and Disney coming into the market with a very low price product. Prices, though, are going up, and now talent and independent studios are being squeezed out.
It\u2019s not entirely clear, however, that movies are a great analogy for games. \u201CMost people don't play a new game every week,\u201D one person in the industry told me, \u201Cinstead they come back to the same game over and over.\u201D So it would be hard to put the really popular games behind Game Pass because those games will not be as profitable. Then again, profit in gaming doesn\u2019t matter to Microsoft, the amounts involved are almost a rounding error for its balance sheet. A firm with multiple super profitable lines of business has bottomless amounts of capital to throw at the problem, which is why Sony\u2019s stock tanked. Sony has a knife, Microsoft has a cannon, plus whatever else it wants to buy with its trillions. 2b1af7f3a8