Posts with «mergers» label

Report suggests NVIDIA is preparing to walk away from its ARM acquisition

NVIDIA has reportedly made little to no progress in gaining regulatory approval for its $40 billion purchase of ARM and is privately preparing to abandon the deal, according to Bloomberg's sources. Meanwhile, current ARM owner SoftBank is reportedly advancing a program to take ARM public as an alternative to the acquisition, said another person familiar with the matter.

NVIDIA announced the deal in September 2020, with CEO Jensen Huang proclaiming it would "create a company fabulously positioned for the age of AI." ARM's designs are used under license almost universally in smartphones and other mobile devices by companies like Apple, Qualcomm, Microsoft, Samsung, Intel and Amazon. 

A backlash began soon after the announcement. The UK, where ARM is based, launched an antitrust investigation into the acquisition in January 2021, and another security probe last November. In the US, the FTC recently sued to block the purchase over concerns it would "stifle" competition in industries like data centers and car manufacturing. China would also reportedly block the transaction if other regulators don't, Bloomberg's sources say. 

We continue to hold the views expressed in detail in our latest regulatory filings — that this transaction provides an opportunity to accelerate Arm and boost competition and innovation.

Companies like Intel, Amazon and Microsoft have reportedly given regulators enough information to kill the deal, the sources say. They previously argued that NVIDIA can't preserve ARM's independence because it's an ARM client itself. As such, it could also potentially become both a supplier and competitor to ARM licensees. 

Despite the stiff headwinds, both companies maintain that they're still pushing forward. "We continue to hold the views... that this transaction provides an opportunity to accelerate ARM and boost competition and innovation," NVIDIA spokesman Bob Sherbin told Bloomberg. "We remain hopeful that the transaction will be approved," a SoftBank spokesperson added in a statement.

Despite the latter comment, factions at Softbank are reportedly pushing for an ARM IPO as an alternative to the acquisition, particularly while the semiconductor industry is so hot. Others in the company want to continue pursuing the transaction given that NVIDIA's stock price has nearly doubled since it was announced, effectively increasing the transaction price.

The initial agreement expires on September 13th, 2022, but will automatically renew if approvals take longer. NVIDIA predicted that the transaction would close in approximately 18 months — a deadline that now seems unrealistic.

Google files motion to dismiss four charges in antitrust lawsuit

Google has filed a motion to dismiss most of an ad tech-focused antitrust lawsuit brought forward by a group of state attorneys general. It has requested that a federal court dismiss four of the six charges with prejudice, which would prevent them from being brought back to the same court.

"The complaint misrepresents our business, products and motives, and we are moving to dismiss it based on its failure to offer plausible antitrust claims," Adam Cohen, Google's director of economic policy, wrote in a blog post. The company says the plaintiffs failed to provide evidence of wrongdoing for several of their allegations and that much of the suit "is based on outdated information that bears no correlation to our current products or business in this dynamic industry (and in any event never amounted to a violation of antitrust laws)."

The AGs, who are led by Texas AG Ken Paxton, claimed Google abused its power to shore up its position in the online ads market. They said the company agreed a "sweetheart deal" in 2018 that gave Facebook parent Meta a boost in ad header bidding (a type of tech allows publishers to solicit bids from multiple ad exchanges simultaneously) in exchange for support for Google's Open Bidding method of selling ads.

Google said the deal was above board and that it wasn't a secret, as Facebook Audience Network (FAN) was one of several partners for its Open Bidding program. Cohen said the deal "does not provide FAN with an advantage in the Open Bidding auction. FAN competes in the auction just like other bidders: FAN must make the highest bid to win a given impression, period. If another eligible network or exchange bids higher, they win the auction."

The AGs also alleged that Google harnessed at least three programs to manipulate ad auctions. The aim, according to the states, was to push publishers and advertisers into using the company's own tools.

"State Plaintiffs respond to Google’s success by seeking to compel Google to share with its competitors the fruits of its investments and innovation," Google wrote in its filing. "They criticize Google for not designing its products to better suit its rivals’ needs and for making improvements to those products that leave its competitors too far behind. They see the 'solution' to Google’s success as holding Google back, rather than letting market forces urge its competitors forward."

As Reuters notes, the two other charges in the suit are based on state law and were stayed in September. Although Google hasn't asked for those to be dismissed, it reserved the right to make that request at a later date.

Microsoft consolidating the video game industry is bad for everyone

It was cute at first. When Xbox head Phil Spencer took the stage at E3 2018 and announced the acquisition of five notable studios – Undead Labs, Playground Games, Ninja Theory, Compulsion Games and The Initiative – the air inside the Microsoft Theater turned electric. It felt like the company was righting a wrong in its business plan and finally building an internal roster of exciting games that it could offer exclusively on Xbox platforms. You know, a few friends to keep Master Chief company.

Today’s announcement that Microsoft is buying Activision Blizzard, the largest third-party publisher in the video game industry, doesn’t feel as harmless. Four years on and numerous acquisitions later, the Activision Blizzard deal feels like an extreme escalation of Microsoft’s plans, and it could mark a turning point in the video game industry as a whole, with negative consequences for both players and developers.

So far, public reaction to the acquisition has been mixed, which makes sense for a few reasons: first, Activision Blizzard's sheer size is daunting, and this purchase represents more money and industry power than Microsoft's previous gaming acquisitions combined. Second, Activision Blizzard is currently the subject of multiple investigations into allegations of sexual harassment and gender discrimination at the studio, where CEO Bobby Kotick has been in charge and largely unchecked for the past 30 years. The Wall Street Journal is reporting that Kotick is poised to leave the company in a golden parachute once the Microsoft deal goes through.

This is the first time Microsoft has received a confused response to acquisition news, rather than outright praise, and that's because this isn't a standard transaction. It's the clearest sign yet that we're in the video game industry's era of consolidation.

Back in 2017, Microsoft was badly losing the first-party IP fight to Sony and Nintendo. By the end of that year, Xbox had shut down two of its internal studios, Lionhead and Press Play, it had killed a few hotly anticipated projects, and even with the Xbox Series X right around the corner, there wasn’t much to look forward to in the company’s software reserves. The acquisition announcement at E3 2018 was a sigh of relief for anxious Xbox fans.

By February 2019, Microsoft had 13 studios and publishing organizations under the banner of Xbox Game Studios.

Microsoft

And then in September 2020, Microsoft revealed it was buying ZeniMax Media, the parent company of Bethesda, id Software, Arkane Studios and Tango Gameworks. The gaming world generally rejoiced, but a few folks also started glancing around, suspicious. These studios were a big deal – the stewards of Fallout, Doom, Dishonored, Wolfenstein, Deathloop, Starfield and Elder Scrolls – and they were being added to Microsoft’s substantial pile of medium-sized companies, more names in a growing list. That alone was cause for pause.

For most fans, the main question was, what did the acquisition mean for games like The Elder Scrolls VI, which was part of a series that historically hit PlayStation and Xbox platforms alike? Basically, would Elder Scrolls VI come to PS4 and PS5?

Turns out, probably not.

One year after Microsoft’s purchase of Bethesda, Spencer told GQ that he believed the Xbox ecosystem was the best place for all of the franchises in the studio’s repertoire, including The Elder Scrolls VI. He all but confirmed it would be exclusive to Xbox.

“It’s not about punishing any other platform, like I fundamentally believe all of the platforms can continue to grow,” Spencer told GQ. “But in order to be on Xbox, I want us to be able to bring the full complete package of what we have. And that would be true when I think about Elder Scrolls VI. That would be true when I think about any of our franchises.”

Starfield, Bethesda’s sci-fi RPG built for the ninth console generation, will definitely be exclusive to Xbox Series X/S and PC, skipping PS5 entirely. Spencer’s comments make it clear that Xbox is eyeing exclusivity for its franchises, and after today’s $69 billion deal goes through, that’s going to include Activision Blizzard games.

Microsoft

Activision Blizzard is the largest third-party publisher in gaming, and it’s the owner of massive franchises including Call of Duty, Overwatch, Diablo, World of Warcraft, Hearthstone and Candy Crush. As a third-party studio, Activision Blizzard has been able to negotiate with the main platform holders to get its software on the consoles and devices it wants. This doesn’t always equate to same-day launches or in-game item equity, but generally speaking, this position has helped ensure Activision Blizzard games reach as many players on as many platforms as possible. Exclusivity agreements and distribution deals are the main source of competition in the industry at this point, allowing outside developers to advocate for their games without feeling beholden to any console owner in particular.

When a platform holder becomes the largest publisher in gaming, it flips the script completely. It jams the script into a shredder, burns the scraps to ash, condenses the ash into stone, and then throws that to the bottom of the Mariana Trench.

Let’s take Call of Duty, a series with predictable annual installments, for example. Over the years, Activision has shifted allegiances between Microsoft and Sony, offering early access and exclusive game modes to Xbox platforms, then PlayStation, and mixing it up along the way. Among all the backroom talks, bad blood and better offers, it’s always been up to Activision to cut the best deal for Call of Duty, console holders be damned.

After the acquisition, that negotiation looks entirely different, if it even exists at all. As the owner of Call of Duty, Microsoft can tell Sony to screw off, keeping one of the industry’s biggest franchises exclusive to Xbox platforms.

This likely won’t happen right away, but it’s certainly a possibility down the line. In his blog post about the acquisition, Xbox’s Spencer didn’t address Sony or Nintendo platforms specifically, but he alluded to the possibility of cross-platform support for Activision Blizzard’s franchises. 

“Activision Blizzard games are enjoyed on a variety of platforms and we plan to continue to support those communities moving forward,” he said, without detailing what he meant by “platforms” or “support.” Keep in mind, this was the messaging around Elder Scrolls VI at first, too.

Microsoft isn’t the only company in the midst of a studio-hoarding spree: Sony picked up its 13th internal studio, Housemarque, in June 2021, while Tencent is chugging along with ownership of Riot Games, financial stakes in a handful of massive studios, and the purchase of LittleBigPlanet 3 developer Sumo Group in July 2021. Even Valve has scooped up a handful of independent creators in recent years, including the team behind Firewatch and some members of Kerbal Space Program.

MARK RALSTON via Getty Images

Microsoft’s purchase of Activision Blizzard simply feels like the final push into a new era for the video game industry: consolidation.

While exclusivity deals may be the short-term concern, this trend has a longer and more tragic tail. It’s highly likely that there will be more acquisitions by Microsoft, Sony and other major names in gaming, and these deals and subsequent companies will only get bigger with time. With just a few massive studios controlling a huge chunk of the software pipeline, it could instill a sense of homogeneity among new titles, killing innovation as each developer attempts to conform to the corporate environment around them, actively or subconsciously.

Even with “creative freedom” built into their contracts, the acquired studios will all use the same QA process, funding arrangement, marketing plan, management structure and editing cycle; they’ll have the same bosses and face the same oversight. And when all new products are the result of a singular perspective, they’re bound to feel familiar. Stale, even. Boring.

Microsoft’s acquisition of Activision Blizzard is an escalation of the exclusivity scheme, and it represents a new way of doing business. Now and for years to come, consolidation is the name of the game.

Maybe one day we’ll get Consolidation 2: Blow It All Up And Make Everything Indie Again, but that one might have trouble finding a publisher.

Microsoft is buying Activision Blizzard for $68.7 billion

Microsoft just made one of the largest-ever bids for a game studio. The company has announced plans to acquire Activision Blizzard for $95 per share, valuing the all-cash deal at an enormous $68.7 billion. The deal would make the combined entity the "third-largest" game company by revenue, according to Microsoft, and would put titles like Call of Duty and World of Warcraft under the company's wing. Microsoft plans to add Activision Blizzard games to Game Pass as part of the deal.

Developing...

AMC buys the owner of the anime streaming service Hidive

AMC Networks has acquired anime distributor Sentai. Financial terms of the deal haven’t been disclosed, but the purchase includes Sentai’s Hidive streaming service. It will join AMC’s stable of “targeted” streaming platforms, which already includes services like Shudder, IFC and SundanceTV. As part of the deal, AMC has also picked up Sentai Studios, the Anime Network and the company’s extensive catalog of anime titles. Some of the projects Sentai holds the license to include K-On! from Kyoto Animation and Haikyu!! from Production IG.

The acquisition comes less than a year since Sony completed a $1.175 billion deal to buy Crunchyroll from AT&T. At the time, the company said it would work quickly to create a unified anime subscription service that would feature content from both Funimation, which Sony has owned since 2017, and Crunchyroll. If nothing else, today's deal shows just how big of a business anime has become in the west. 

Microsoft's $19.7 billion Nuance acquisition wins EU approval

The European Commission has approved Microsoft’s $19.7 billion bid to buy Nuance Communications. The regulator said on Tuesday the proposed acquisition “would raise no competition concerns” within the European Union. In analyzing the bid, it found that “Microsoft and Nuance offer very different products.” Moreover, it believes the company will continue to face “strong” competition from other firms in the future.

Before today, the US and Australia had both signed off on the purchase, but it’s not yet a done deal. On December 13th, the UK’s Competition and Markets Authority said it would investigate the transaction. With the regulator accepting public comments until January 10th, 2022, it’s unlikely the deal will close by the end of 2021 as Microsoft had said it would when it first announced its intention to buy Nuance. 

Meta reportedly facing FTC probe over its acquisition of VR workout app 'Supernatural'

Meta, formerly Facebook, is firmly in the FTC's crosshairs over its various acquisitions that the agency believes may have been made to dominate the space and eliminate competition. According to The Information, one of the purchases the Federal Trade Commission is looking into is its $400 million deal to acquire Within, the developer of popular virtual reality workout app Supernatural for the Oculus platform. 

The agency reportedly opened a probe into the purchase after Thanksgiving, almost a month after the companies announced the acquisition back in October. If the report is true — neither the FTC nor the companies confirmed the regulatory review to the publication — then Within and Meta wouldn't be able to finalize the deal for another year. It could take even longer than that if the agency challenges it in court.

Within wasn't the only VR app developer that Meta had acquired, but the others were apparently too small to be investigated. VR fitness apps, like at-home workout equipment, soared in popularity during the lockdown, and Supernatural quickly became popular after its launch in April 2020. As The Information notes, one of the FTC's possible lines of inquiry is whether Meta was planning to develop a VR workout app of its own. It will take Meta less time to snap up an existing product than make one of its own, after all.

Meta boss Mark Zuckerberg famously said in the past that "it's better to buy than to compete," with regards to Facebook's Instagram acquisition. The FTC recently filed new antitrust charges against the company, accusing it of using its Instagram and WhatsApp acquisitions in 2012 and 2014 to secure its position in the market. Meta is still also facing an investigation over its reported $400 million Giphy purchase in 2020.

Sony buys co-development studio Valkyrie Entertainment

Sony has acquired Seattle-based developer Valkyrie Entertainment. Financial terms of the deal haven’t been disclosed. Founded in 2002, it’s best known for providing co-development services to other game studios. In the past, Valkyrie has worked with Sony, Microsoft and Riot to help on titles like God of War, Halo Infinite and Valorant. Before today’s announcement, it was working on God of War: Ragnarok with Sony’s Santa Monica Studio.

Today we announce @valkyrieent will be joining the PlayStation Studios family. The studio will be making invaluable contributions to key PlayStation Studios franchises pic.twitter.com/sNTugminD5

— Hermen Hulst (@hermenhulst) December 10, 2021

The acquisition was announced by Herman Hulst, the head of PlayStation Studios. “Valkyrie’s diverse capabilities will be welcomed by every team at PlayStation Studios as we continue to focus on delivering extraordinary gaming experiences,” he said in a statement.

For Sony, the deal caps off a year full of studio purchases. In the last 12 months, the company has added Housemarque, Nixxes Software, Firesprite, Bluepoint Games and now Valkyrie Entertainment to its first-party lineup for a total of 17 studios under its banner. Sony used to be a lot more methodical when it came to its talent acquisitions. Between 2010 and 2020, it only added two studios: Sucker Punch Productions and Insomniac Games. If there’s a reason for the change in pace, it likely has at least something to do with Microsoft’s $7.5 billion deal to buy Bethesda parent company ZeniMax Media in 2020. 

UK will reportedly investigate NVIDIA's purchase of ARM over security concerns

The UK government apparently isn't satisfied with its initial probe of NVIDIA's ARM purchase. As Reutersreports, The Sunday Timeshas heard Digital and Culture Secretary Nadine Dorries will order the country's Competition & Markets Authority to conduct a "phase two" investigation of NVIDIA's deal over national security issues. The announcement could come as soon as next week, The Times said.

A second investigation would reportedly last about six months. After that, officials could either block the deal, approve it as-is or require concessions.

The country's Department for Digital, Culture, Media and Sport declined to comment on the story. We've asked NVIDIA for comment. The tech firm has focused its energy so far on downplaying concerns about ARM's neutrality if the deal closes, promising an open licensing model that treats customers fairly.

Any second investigation wouldn't necessarily spell doom for NVIDIA's acquisition. It would suggest the government has some qualms, however, and that NVIDIA might have to make some sacrifices. At the least, the company would have to be patient — it wouldn't get UK approval until 2022 at the earliest, and it would still have to wait for other regulators before finalizing the merger.

Spotify acquires audiobook platform Findaway

Spotify could soon be home to a lot more audiobooks. The streaming service has acquired audiobook platform Findaway, the companies announced. Terms of the deal were not disclosed, but the acquisition suggests Spotify is looking to build out its own library of audiobook titles.

Findaway is an Ohio-based company that boasts a catalog of more than 325,000 titles, according to its website. The company has partnerships with Apple, Amazon and other retail heavyweights, and also makes tools for audiobook creators. While it’s not yet clear how Spotify might integrate Findaway’s catalog into its own service, the company said in a statement that the deal would help it “quickly scale its audiobook catalog” and create new opportunities for authors and publishers.

The acquisition isn’t Spotify’s first foray into audiobooks. The company has previously experimented with a handful of celebrity-narrated public domain classics, and a Harry Potter audiobook at the start of coronavirus lockdowns in 2020. But the acquisition signals the streaming platform now has much greater ambitions in the space. The move also echoes Spotify’s approach to podcasts, as the company used a number ofacquisitions to build out its catalog and creation tools. So while it’s so far unclear what exactly Findaway means for Spotify subscribers and would-be audiobook listeners, it seems there are a lot more audiobooks in the company’s future.