Acquisitions are a pillar of Gafam’s strategy, even after sometimes more than 45 years of existence. This is all the more true since, according to some observers, weak signals show that these technological giants are approaching a certain innovation ceiling and would be more inclined today to bet on the findings of young companies. Since their inception, Google, Apple, Facebook, Amazon and Microsoft have acquired at least 838 companies. However, these operations are not always revealed … In total, according to cross-data from Pitchbook, CB Insights and Crunchbase, the ranking of the number of acquisitions is as follows:
- Microsoft: at least 266 acquisitions
- Google / Alphabet: at least 248 acquisitions
- Apple: at least 124 acquisitions
- Amazon: at least 108 acquisitions
- Facebook: at least 92 acquisitions
Microsoft in prime position as buyer in 2021
In 2021 alone, the number of operations remains impressive. Amazon has made a deeper foray into entertainment and advertising by acquiring MGM studio ($ 9 billion) and podcast platform Art19, as well as BtoB e-commerce with Selz. Apple for its part has expanded its Apple Music service with Primephonic.
More discreet in 2021 than the previous year, Facebook still got its hands on the video game studio Unit 2 Games (cloud gaming) and BigBox VR (virtual reality). On the Mountain View side, Google has taken over the start-ups Dysonics (3D audio), Provino Technologies (network-on-chip solutions) and Playspace (collaborative tool for virtual meetings).
Microsoft, finally, took out the checkbook at least nine times in 2021 to sign acquisition agreements which, like other players in the big tech, offer an overview of its preferred development strategies. The volume of these operations reflects above all a highlight of the activity of Gafam today: while all the actions of Google, Amazon, Facebook and Apple are scrutinized by the antitrust authorities of different countries, the firm de Redmond, free from political and judicial interference, appears to currently enjoy a prime position as a buyer.
For Satya Nadella, CEO of Microsoft, the company mostly escapes antitrust surveillance today because it does not seek to amass different platforms to exploit user data for the benefit of advertisers, but rather to provide technology services in an agnostic manner, and above all to companies and public bodies.
It should also be remembered that Microsoft got its hands on GitHub for 7.5 billion dollars in 2018, as well as on LinkedIn for no less than 26.2 billion dollars in 2016. Going back further, we also rediscover the studio’s acquisitions Mojang video game (Minecraft) for $ 2.5 billion in 2014, Nokia’s mobile telephony activity in 2013 ($ 7.2 billion), as well as Skype in 2011 ($ 8.5 billion). The company thus carried out 13 operations known to more than one billion dollars, more than any other member of Gafam.
An improvement in Microsoft’s acquisition strategy in AI
Microsoft’s appetite, which escaped dismantling in the early 2000s following its anti-competitive practices lawsuit, is therefore not new. That said, the firm has shown that in this field, it still knows how to have a significant strike force, not only in volume, but also in value.
The most emblematic of this year remains – for the moment – the purchase in April of Nuance Communications, specialist in artificial intelligence (AI) and voice recognition, for 19.7 billion dollars. This is the second largest acquisition in Microsoft’s history after LinkedIn. With this colossal purchase, Microsoft has indicated that it wants to offer “New cloud and AI offers for the healthcare industry”, as well as to other sectors.
The arrival of Nuance in its fold signals for some observers an improvement in its acquisition strategy in AI. We can also cite two recent acquisitions: that of the start-up Suplari, which has developed analytical tools to allow companies to scrutinize their spending – and thus boost the AI capabilities of the Microsoft Dynamics 365 platform -; and that of Orion Systems, specialist in motion analysis solutions in images and videos using AI. Solutions that have also been integrated into Dynamics 365 and the Microsoft Power Platform with the aim of strengthening the range of applications for professionals.
Full throttle in the cloud
“Clearly, Redmond has gone on the offensive when it comes to M&A, with the company clearly in a strong position to capitalize on its strong cloud positioning going forward, with Nuance as a further accomplishment”, noted at the time the analyst Dan Ives. UBS bank also believed that Microsoft is looking to further expand its portfolio of cloud offerings, especially when AWS, Amazon’s lucrative cloud subsidiary, continues to generate more profits (13 billion dollars operating profit in 2020).
The list of cloud-related solutions captured by Microsoft to strengthen its Azure platform has been growing almost quarterly for nearly two years. One of the most significant, Affirmed Networks, acquired by Microsoft in March 2020 ($ 1.35 billion), has developed 5G network virtualization solutions in the cloud. Microsoft was also taking a further step in the telecommunications industry by providing operators and equipment manufacturers, via Azure, with the means to simplify their operations at reduced cost. At the same time, Google was also investing in this field with the launch of a platform called Anthos.
Microsoft also got its hands in July 2021 of AT & T’s Network Cloud platform which allowed the operator to manage its 5G network and was to be integrated with Azure for Operators. In May 2020, the specialist in virtualized network software and communications solutions for operators Metaswitch Networks came to solidify Microsoft’s position at the crossroads of telecommunications and the cloud.
Recently, CloudKnox and RiskIQ (enterprise cloud security) have moved under the Microsoft flag. In the spring of 2021, Kinvolk (specialist in open source Linux and cloud native) has also joined the ranks of the firm, as has The Marsden Group, allowing it to strengthen the industrial component of its cloud offering. We can also mention the buyouts in 2020 of ADRM Software (data modeling solutions) and, in 2019, of Mover and Movere, two companies with almost identical names specializing in the migration of data to the cloud.
IoT, video games and productivity, other Microsoft guidelines
Beyond AI and the cloud, other segments are benefiting from significant investments. This is the case of IoT, an activity for which the company had announced in 2018 a savings of $ 5 billion over four years. A budget that was used in particular to get hold of two specialists in cybersecurity of connected devices: ReFirm Labs, in June 2021, and CyberX a year earlier.
Microsoft has also made a name for itself in video games with another monumental acquisition: the $ 7.5 billion ZeniMax Media acquisition in March 2021. By casting its net on the parent company of many studios, Microsoft could now count on 23 video game studios in order to strengthen its Xbox offering and face Sony with exclusivity. This arrival followed that of the e-sport event platform Smash.gg, at the end of 2020, which was to expand the e-sport content offer of MSN, Microsoft’s internet portal, a few months after the closure of Mixer, the one – here having failed to compete against Twitch and YouTube.
Finally, we can note Microsoft’s more advanced forays into task automation (Softmotive, May 2020), collaborative work solutions (Peer5, August 2021) or productivity and creativity (Clipchamp, September 2021).
Social networks for the new front?
If one needed another sign of Microsoft’s quest for diversification, let us note its attempt to take Discord, a popular messaging service among gamers, for 12 billion dollars in 2021. An operation which did not ultimately succeed, Discord preferring, it seems, the option of going public. However, Microsoft has shown its willingness to get their hands on a service that could have been perfectly integrated into Xbox Game Pass and overshadow rival services like Sony’s PlayStation Now.
We must also not forget the 20 to 30 billion dollars that the firm would have been ready to put on the table in 2020 to take over TikTok’s activities in North America, Australia and New Zealand (an offer ultimately rejected by ByteDance, the parent company of the video app). Just like the discussions about an acquisition that Microsoft would have held at the end of 2020 with Pinterest, whose market capitalization was then … 51 billion euros. Either way, Microsoft was ready to close at least three deals worth over $ 10 billion in just a few months.
In the past five years, only Amazon has spent more than this amount to acquire a business (Whole Foods in 2017). These signals also showed that Microsoft does not rule out the idea of investing in a perilous ground on which it is absent today: that of social networks, that other technological giants do not seem to want to share. .
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