Big Market Acquisitions - Microsoft

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A collection of some of Microsoft's applications and services. All rights reserved by Microsoft Corp.

Microsoft (MSFT), one of the world's greatest technological firms, was started in a garage in Albuquerque, New Mexico in 1975 by Bill Gates and Paul Allen. Five years later, Gates and Allen were hired to create the operating system for IBM's first personal computer (PC), which was followed in 1985 by the release of Microsoft's now-ubiquitous Windows software. [1]

The company's initial public offering (IPO) took place on March 14, 1986, and was successful. A little time after the market started for business, the stock reached a high of $29.25 per share, before eventually closing at $27.75 per share.[2] Microsoft had a market capitalization of $519.777 million at the time of the initial public offering. Some analysts referred to this as “the deal of the year.” [3] By the late 1980s, Microsoft became the world’s largest PC software company.

While Microsoft originated as a software firm, it has now moved into many areas of the technology industry. The firm currently provides personal computing devices, cloud computing infrastructure and services, artificial intelligence (AI), and other products in addition to software. Much of Microsoft's growth has come through a series of modest and major acquisitions for tens of billions of dollars.

Following the acquisition of a market capitalization, Microsoft has gone on to buy over 225 firms, purchase shares in 64 companies, and divest itself of 25 businesses. One hundred and seventy-seven of the companies that Microsoft has bought are based in the United States.[4] The financial specifics of the majority of these mergers and acquisitions have not been disclosed by Microsoft.

After making its initial acquisitions in 1987, it has acquired an average of six companies every year since that time. Between 2005 and 2008, the company acquired an average of more than ten companies per year, including 18 acquisitions in 2006, the highest ever in a single year. These acquisitions included Onfolio, Lionhead Studios, Massive Incorporated, ProClarity, Winternals Software, and Colloquis, among others. Twelve acquisitions totaling more than one billion dollars have been made by Microsoft: Skype (2011), aQuantive (2007), Fast Search & Transfer (2008), Navision (2002), Visio Corporation (2000), Yammer (2012), Nokia's mobile and devices division (2013), Mojang (2014), LinkedIn (2016), GitHub (2018), Affirmed Networks (2020), ZeniMax Media (2020), Nuance Communications (2021), and Activision Blizzard (2019).

Amid the continuing advancements in the information technology industry, Microsoft Corporation is expected to maintain its dominant position in the operating system (OS) and software industries by catering to the needs of consumers in the future. The way the competitive landscape for the computer industry develops over time, and specifically Microsoft's power and control in the industry, will continue to hold the attention of market competitors and also the general public thereby creating a ground for persistent media awareness, and possibly even to the point of significant public concern.[5] When it comes to the ethics of mergers and acquisitions by firms as major as Microsoft, there are two basic schools of thought to explore. The proponents of merger and acquisition activity claim that the vast majority of mergers and acquisitions are ethical since they benefit society as a result of their existence. This argument asserts that mergers increase efficiency while also benefiting shareholders of both the acquiring and target companies. On the other hand, critics of merger activity argue that the motivation for purchasing other companies is nothing more than unfettered greed, which is reminiscent of attitudes toward large business during the 'roaring twenties' period.[6] Consequently, from the opponents' perspective, merger activity is expected to result in significant economic harm to the country, as well as other negative consequences.[7]

Vision and Mission

The execution of Microsoft Corporation's corporate mission and vision statements is the foundation of the business's success as a global computer technology company. The vision statement steers the development of the firm toward a desired future state.[8] Microsoft's corporate vision covers what the corporation can accomplish for its customers, both individually and as an organization. The mission statement of a firm, on the other hand, outlines the overall strategic strategy that will be used to expand the organization and achieve the corporate goal. In its mission statement, Microsoft states that it strives "to empower every person and every organization on the planet to achieve more."[9]  The corporate mission of Microsoft outlines what the company hopes to accomplish in order to empower its consumers. This alignment is critical for optimizing strategic decision-making, particularly in the face of intense competition from companies such as Apple, Google, and IBM, among others.[10]

Key Acquisitions


Forethought developed an application called Powerpoint, which allowed users of Apple Macintosh computers, which Microsoft was already the leading software supplier for at the time, to create overhead transparencies or flip charts using their computers. In the opinion of some industry insiders, such so-called "desktop presentations" had the potential to be just as lucrative as "desktop publishing" — the process of utilizing computers to lay out newsletters and other periodicals.[11]

On July 30, 1987, Forethought was acquired by Microsoft, making it the company's very first acquisition. Microsoft rebranded the presentation application and it would later become known as Microsoft PowerPoint.

With little more than a year and a half on the market, Hotmail went from being an unknown to being the Internet's most popular free email service. With a reported 9.5 million mailbox users at the time of the transaction, according to Hotmail, the startup was acquired by Microsoft in December 1997.[12]

In addition to providing users of the Microsoft Network with a new e-mail alternative, the purchase of Hotmail served as a showcase for Microsoft's other products, such as the scalability of Windows NT and the reliability of the Microsoft Exchange server. The acquisition pushed Microsoft closer to parity with the industry's leading mailbox provider almost immediately.[13]


Skype Technologies was the creator of the VoIP (voice over IP) service called Skype, which had a limited presence in the enterprise communications market. [14]

On May 10, 2011, Microsoft announced the acquisition of Skype Technologies for a reported $8.5 billion. With a purchase price that was 32 times the adjusted earnings of Skype, Microsoft appeared to have a great deal of confidence in its acquisition. Within Microsoft, Skype was designated as a new business division. Skype continues to provide its present offerings to users around the world, and it has been integrated into other Microsoft products in order to increase its reach. [15]


LinkedIn is the world's largest professional network, and its mission is to bring professionals from all over the world together to share ideas and opportunities.

The acquisition of by Microsoft was completed in December 2016. LinkedIn has a user base of more than 400 million professionals, which is a demographic that Microsoft needed to assist the development of its Office products and services.   In addition, the users of LinkedIn provided Microsoft with possibilities to further enhance its cloud computing and customer relationship management initiatives.[16]


The mobile market was dominated by one company for much of the 1990s and early 2000s, and that company was Nokia. As a result of its durable, basic mobile phones that were internet-enabled and equipped with a variety of multimedia features, the company achieved an international reputation. Following the introduction of the iPhone in 2007, competition in the mobile phone business increased, resulting in Nokia's market share rapidly declining.[17]

Microsoft confirmed its acquisition of Nokia’s mobile phone division for $7.2 billion, which was disclosed on September 2, 2013.[18] It is a clear message of ambition to the industry that Microsoft is not holding back in its newfound enthusiasm to push into the mobile market, as evidenced by its multibillion-dollar acquisition of Nokia's devices and services division.

Activision Blizzard

As a gaming behemoth, Activision Blizzard has a portfolio of well-known and highly successful titles, including "Call of Duty,"" Warcraft,""Tony Hawk" and "Candy Crush" (which was purchased from King), among others. [19]

On January 18, 2022, Microsoft completed the acquisition of Activision Blizzard for a total of $68.7 billion in cash, making it the company's most significant acquisition since its founding. Microsoft will become the third largest gaming firm in the world in terms of revenue as a result of the acquisition, which it wants to take advantage of by solidifying its position in a market that already has 3 billion consumers who enjoy video games.[20]

Ethical Dilemmas


Market Perspective

Analysts and investors may re-evaluate the competitive positions of companies in an industry following the news of an acquisition or merger. A well-established and fiercely competitive corporation, such as Microsoft, may be perceived as endorsing the technology, management, or other special talents of the target company for a number of reasons.

Microsoft is frequently criticized by market opponents for what appears to be anticompetitive activity on its part. When the purchase was first finalized, Microsoft became the third-largest provider of smartphones in the world, thanks to its acquisition of Nokia. This increased the number of programs available on Microsoft products.[21] The acquisition of such companies also compelled competitors to develop more in all segments of the mobile phone market in order to stay up with the new technologies that emerged as a result of the acquisitions in question. The fact that the majority of businesses lack the financial resources to develop at the same rate as Microsoft substantially limits the amount of competition they can offer to the behemoth firm.

Large digital technology businesses, such as Microsoft, are accused of pursuing a 'killer acquisitions' strategy in which they absorb promising start-ups in order to eliminate potential future rivals or incorporate them into their own products, so cementing their dominance within the market.[22] This has created a growing sense of urgency about the need to examine present merger control and consider the prospect of a more open approach to examining technological acquisitions.

Domestic Government Perspective

The government, and specifically the Judicial branch, have traditionally refrained from interfering in the market for corporate control because of the high stakes involved.[23] Generally speaking, federal courts have supported the 'right to raid,' repealing the majority of anti-takeover statutes by declaring them unconstitutional on the grounds that such statutes are a burden on interstate or foreign commerce.[24] In contrast, the societal issues that are linked with takeover attempts have not been addressed by the justice system. Because of the absence of judicial engagement, many people have called for the government to intervene on behalf of the general public.

However, Microsoft's quick expansion, both organically and via acquisitions, has drawn the attention of authorities. After losing a US antitrust action, the corporation was required to split into two pieces in 2000. While the verdict was reversed, Microsoft was required in 2002 to follow important regulations to provide a more fair playing field in technology.

Microsoft and other mega-tech corporations are still being chastised for their size and market domination. In response to opponents' requests for giant tech corporations like Amazon (AMZN) to be broken up, the Federal Trade Commission (FTC) asked Microsoft, Apple, Amazon, Alphabet (GOOGL), and Facebook (FB) to disclose details on every acquisition they made between January 1, 2010, and December 31, 2019.[25]

International Government Perspective

It is customary for major multinational corporations ("MNCs") such as Microsoft and Nokia to notify the antitrust authorities of the countries in which they operate before completing a merger or acquisition ("M&A"). Once the antitrust authorities have completed their investigation into potential effects on the economies and markets that they represent, MNCs are required to complete the transaction.[26] Intervention by the authorities is possible in some circumstances, but the level to which they do so varies greatly; intervention is far more likely when the industry in question is one that is politically sensitive, such as the development and manufacture of smartphones or other high-technology items. The ease with which a planned merger and acquisition is approved by regulators is determined by a variety of factors, including the country's economic situation, position in the global market, and if the country is home to prominent enterprises.[27]

In some cases, regulatory approval of a transaction may be conditional on the fulfillment of certain conditions; in such cases, regulators may require the participating companies to agree to certain restrictions on their business functions or to forego the use of certain predetermined assets. The participating companies may be required to agree to specific constraints on their business activities if they want to participate in such a venture. It is not the intention of these conditions to be detrimental to merging enterprises, but rather to preserve market competition while also, in some situations, defending the national economy and manufacturing industry.

Given these considerations, when Microsoft and Nokia filed merger notices in a number of countries and regions in order to obtain approval for a proposed purchase, the level of approval varied substantially depending on the country and territory in which they filed the notification. United States ("US") and European Union ("EU") regulators authorized the transaction without any terms or limits in a short period of time. Russia, India, Turkey, and Israel were among among those who provided such unconditional acceptance. However, the situation was somewhat different in East Asia, specifically in China, South Korea, and Taiwan, which are home to a large number of Microsoft and Nokia's allies and competitors. The antitrust authorities in these East Asian countries took substantially longer to investigate and make their judgements on the proposed purchase, and the decisions were less favorable to the corporations involved in the transaction.[28]

In the end, the authorities in China, South Korea, and Taiwan decided to approve the merger on a conditional basis between early 2014 and mid-2015,[29] rather than outright rejecting it. These conditions ensured that Microsoft's acquisition of Nokia would not have a negative impact on the financial well-being of the companies operating in the same market inside the respective jurisdictions. When dealing with huge corporations such as Microsoft, international antitrust authorities must carefully assess the dangers involved, as seen in this example.

Consumer Perspective

Recent years have seen technology in general, and software products in particular, become increasingly integrated with the daily lives of individuals in the developed world, and this is expected to continue. For developing economies, a greater level of connection with technology is undoubtedly emerging, as it becomes a part of their everyday lives, as it becomes a part of their daily lives. 

As technology continues to play an increasingly essential part in the lives of residents all over the world, the relevance of the industry is predicted to expand exponentially over time. Therefore, it is only logical that the operation of an industry engaged in such industrial activity will continue to be a major public policy concern, and that the operation of such sector will be scrutinized by the public.

The traditional anti-monopoly argument that market power results in a deadweight loss for society as a result of inefficiency in production and allocation may be applied to Microsoft in a number of situations.[30] It is possible that the lack of competition in the markets in which Microsoft operates will result in a stagnating quality of products being given to the general public as a result of this.

The issue of privacy in relation to consumer information is not a new one in the marketing world. Because of the proliferation of databases, a digital trail of information is now available on the vast majority of people who use credit cards, own automobiles and properties, subscribe to web or software programs, and engage in digital spending transactions.

Windows 98 software, when used on a network, generates unique identifiers that are collected upon registration. As a result, Microsoft has amassed an enormous database of personal information about its users, which has prompted privacy advocates to criticize Microsoft in the past.[31]

Microsoft argued that these features were intended to improve product offerings, but the corporation has committed to change them to avoid backlash. Customers can opt out of Windows 98 registration, according to the company, which also committed to delete personal information it had wrongfully gathered.[32] However, its acquisition of companies that collect large amount of data on its users, such as LinkedIn, allows Microsoft to obtain the data that it was previously criticized for.

Response to Ethical Concerns

Microsoft has become more cautious in its business methods over the years, focusing some of its efforts on Corporate Citizenship policies that allow them to maintain their standing as a widely recognized platform. Case decision penalties were successful in getting Microsoft to reassess its business practices and embrace a more ethical code of conduct.[33]

The Windows SO platform, which is now one that other firms, not just Microsoft, may grow, is an example of this transition.[34] This willingness to adapt and allow for more competition and transparency has resulted in Microsoft products being widely acknowledged as the industry standard, with the widest range of applications available and a high level of support.

Microsoft continues to strive for ethical application of technology by becoming a co-founder of the Partnership on Artificial Intelligence to Benefit People and Society, a non-profit organization that aims to promote the usage of AI technologies to the general population. The Partnership on AI's goal is to address issues with AI technology in order to benefit the general public. Members of the organization will collaborate to conduct research, recommend best practices, and publish findings under an open license in areas such as ethics, fairness, and inclusivity; transparency, privacy, and interoperability; collaboration between people and AI systems; and the technology's trustworthiness, reliability, and robustness.[35] 

Microsoft can continue to grow while maintaining its reputation as a trustworthy firm in the eyes of consumers and the software industry by reaching its own potential, not only in terms of generating new technologies, but also in terms of corporate citizenship. Microsoft will be able to move forward in its aim to empower individuals and organizations all over the world to fulfill their full potential if it improves the way it interacts with consumers and competitors in the marketplace.


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