There are solid arguments for Microsoft to acquire Netflix
Netflix’s naming of Microsoft as a partner for its ad-supported service in July was a signal of what the two companies might be planning in the future.
Microsoft’s chief executive Satya Nadella’s spree in buying new businesses is another, for since 2004 he channeled over $48 billion for shopping various tech outlets.
The first acquisition was $2.5 billion of the company behind the hit game Minecraft. Later, Microsoft bought LinkedIn for $26 billion and the speech recognition and artificial intelligence software developer Nuance for $20 billion.
These days, the software maker is dealing with competitive pressure in its attempt to acquire video game publisher Activision Blizzard.
Microsoft is planning to pay $68.7 billion for the deal, with the goal of closing it by June 2023, but U.S. regulators are contesting its right to absorb the “Call of Duty” creator.
The Federal Trade Commission on Thursday filed an antitrust case against Microsoft to challenge the acquisition, claiming it would violate U.S. law.
According to Reuters, even if Nadella loses the case, owning Netflix would make strategic sense and probably be an easier sell in Washington and Brussels.
Aside from being its advertising partner for a new advertising-supported subscription service, Microsoft President Brad Smith also sits on the Netflix board.
Microsoft has a $1.8 trillion market value and wants to offer a video-game streaming service over multiple devices, so that’s another reason for the deal.
Netflix has plans in gaming also, since in 2022 the company snapped up developer Spry Fox, its sixth in-house studio.
Nadella already proved to be a bold dealmaker, so even if there are challenges in finding a financial logic for the deal, the two might pair especially if Netflix’s stock price has another sharp decline.