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Microsoft CEO Satya Nadella confident about activision deal approval, handling of economy

Microsoft is either the No. 4 or No. 5 competitor in the video game industry, depending on how you count, Nadella said

Microsoft CEO Satya Nadella confident about activision deal approval, handling of economy
Nadella also expressed optimism that Microsoft can cope with a weaker economy and rising inflation—and help its customers endure as well. (Photo source: Bloomberg)

Microsoft Corp. Chief Executive Officer Satya Nadella said he’s confident the company can gain regulatory approval for its $69 billion purchase of Activision Blizzard Inc. even in the face of an in-depth regulatory probe in the UK. “Of course, any acquisition of this size will go through scrutiny, but we feel very, very confident that we’ll come out,” he said in an interview with Bloomberg Television.

Nadella’s prediction puts him at odds with investors’ skepticism about the deal. While Activision rose Thursday, outperforming a slump in tech stocks, Wednesday’s close of $75.32 still left the company more than 20% below the offer price—a signal of massive doubt that Microsoft will ever be able to consummate the transaction.

Microsoft is either the No. 4 or No. 5 competitor in the video game industry, depending on how you count, Nadella said. And the No. 1 player, Sony Group Corp., has made several recent acquisitions. “So if this is about competition, let us have competition,” he said.

The UK’s Competition and Markets Authority said earlier this month that it decided to kick-start a longer review, a move that was expected after the CMA flagged concerns that the deal could lessen competition in the markets for consoles, subscriptions and cloud gaming. The combination with Activision—which owns franchises such as Call of Duty, World of Warcraft and Guitar Hero—will make Microsoft the world’s third-largest gaming company.

Nadella also expressed optimism that Microsoft can cope with a weaker economy and rising inflation—and help its customers endure as well.

“The constraints are real—inflation is definitely all around us,” he said. “I always go back to the point that in an uncertain time, in an inflationary time, software is the deflationary force.”

Microsoft is focused on “ensuring that our customers are able to do more with less,” Nadella said. “So in terms of outlook, I am optimistic about Microsoft’s value proposition. I’m optimistic about our share, but we are not immune from anything that is a macroeconomic headwind.”

The company has been slowing hiring and eliminating many open jobs, including in its Azure cloud business and security software unit, as well as Windows and Office, Bloomberg News reported earlier this year. Nadella said the company will keep growing in some areas after adding approximately 70,000 workers during the pandemic.

“We are going to be more deliberate,” he said.

Microsoft will be “taking the same medicine, which is doing more with less,” Nadella said. “We have many businesses that are really doing super well and will continue to grow, but we will also be looking at what the macroeconomic situation is.”

With the company continuing to grow and increase productivity, “we’ll be able to navigate the waters,” he said.

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