Microsoft's Activision Blizzard purchase under fire from World Bank chief

Microsoft Logo at Ignite
Microsoft Logo at Ignite (Image credit: Windows Central)

What you need to know

  • World Bank President David Malpass criticized Microsoft's recently announced purchase of Activision Blizzard.
  • Malpass asked if the $68.7 billion spent on the deal is the "best allocation of capital."
  • Microsoft's purchase of Activision Blizzard was compared against a recent agreement by wealthy nations to donate money to help poor countries.

Microsoft recently received criticism from World Bank President David Malpass regarding the company's $68.7 billion acquisition of Activision Blizzard. The World Bank President and former chief economist of Bear Stearns questioned if Microsoft's purchase was the "best allocation of capital." In comments made at an event at the Peterson Institute for International Economics (via Reuters), Malpass contrasted Microsoft's expenditure to the amount of money wealthy nations have committed to helping poor countries.

The $68.7 billion purchase of Activision Blizzard is significantly higher than the $23.5 billion that wealthy countries agreed to donate over the next three years to The World Bank's International Development Association. With that said, it's worth noting that Microsoft is a business, not a country.

Malpass' argument is not solely based on the total of Microsoft's funds spent on the acquisition of Activision Blizzard. The World Bank President highlights that the funds spent on the purchase of the gaming giant will in large part end up in the bond market, which is not accessible to some poorer countries.

"You have to wonder: 'Wait a minute, is this the best allocation of capital?'" said Malpass. "This goes to the bond market. You know, a huge amount of (capital) flows are going to the bond market."

He then addressed the feedback loop these allocations create. "That gets you into a situation where a huge amount of the capital is being allocated to already capital-intensive parts of the world — the advanced economies — building more and more on top of already heavily built infrastructure and real estate, for example."

He proceeded to clarify where he felt money should be going. "In order to address the refugee flow, that malnutrition that's going on, and so on, there has to be more money and growth flowing into the developing countries."

While Microsoft does not donate as much money to poor and developing nations as it will spend on the acquisition of Activision Blizzard, the company donates over a billion dollars' worth of software and services (opens in new tab) each year and regularly donates to charitable causes.

Microsoft has not yet responded to media requests for comment.

Sean Endicott
News Writer and apps editor

Sean Endicott brings nearly a decade of experience covering Microsoft and Windows news to Windows Central. He joined our team in 2017 as an app reviewer and now heads up our day-to-day news coverage. If you have a news tip or an app to review, hit him up at sean.endicott@futurenet.com (opens in new tab).

28 Comments
  • They wanted capitalism, they get it. Companies in this system are not obliged to do humanitarian work. If that's what he wants, he shouldn't work for one of the most notorious institutions that enable this system and instead promote society systems that incorporate human rights.
  • 1000 %agree.
    It's like Freddy Krueger criticizing Jason Voorhees on mass murder it's like what
  • The economic system that gives you your rich country living standard does not actually resemble murder.
  • Capitalism against individual rights?
    You are writing pure BullSh
  • Capitalism does not care about people.
    It's all about the highest bidder. The end
  • Your teenager politics are not really relevant here. And those "highest bidders" include regular, middle class consumers.
  • If you'd like to live in a country where private companies are required to do "humanitarian work", I've got a couple bridges to sell you. Meanwhile, back here on Planet Earth, in advanced democracies, foreign aid is the job of the governments and charities.
  • And billionaires worried about their "legacies".
  • Mind you're business Mr. Bank this is America and we are a capitalist nation.
  • I'm a pretty staunch liberal, and I have no idea what he's trying to say. If you want to suggest they should donate more, say that. But to do it around this deal, kind of implying you think they should have donated the $70B seems pretty ridiculous. Or does he think there's something Microsoft could have actually invested the money in around these countries and gotten some kind of return?
  • Really?! You don't think 70 Billion dollars would help impoverished countries in all sorts of ways? It's not hard to understand at all. For the record MS can do what they want and I'm OK with it, but the point is not hard to grasp
  • No amount of money will help a country wich it is poor for different reason's than money.
    Venezuela it is proof of that
  • $70 billion is not that much money compared to the GDP of a country, and Microsoft is a private corporation, not a government (which might have a foreign aid budget) or a charity. This isn't rocket science. If Malpass wants more foreign aid, he should be bothering governments, like what Jeffrey Sachs did successfully 20 years ago.
  • He's not saying anything deep. He's here for attention and looking for a new job. He is a Trump appointee a failed banker (read about his leadership at Bear Stearns, which no longer exists) and not someone who should be anywhere near the reigns of power.
  • No one should ever feel guilty or pressured to do something for someone else because of their success. Now if Microsoft was compelled to donate something, then that would be great. But no one should try to demand what to do with the money that they earned
  • How is this any different than any other M&A transaction in recent history? It's not even particularly large. Why single out this deal? Malpass is talking out of his rear end. By the way, former Trump advisor and Trump appointee to the World Bank David Malpass is not an actual economist. He has an MBA. And Bear Stearns likely doesn't exist anymore because of this fact. Incredible how he's publicly opining about the allocation of capital given how much Bear put into a fabulously inflated US mortgage market in the early 2000's when he was "chief economist."
  • Microsoft could donate $70 Billion and help poor people. Once. Or Microsoft could invest $70 Billion and help 10,000 people make a living ongoing. Those 10,000 people will then participate in the economy when they purchase homes, pay taxes, buy consumer goods, hire service providers, etc. Which one do you think will have a larger impact?
  • It's not like Microsoft is creating 10,000 new jobs here. They are taking on existing employees, and I would HEAVILY bet on consolidation during the merger that actually ends up with some of those employees looking for work elsewhere.
  • True. But in its time, Microsoft has created hundreds of thousands of jobs in dozens of countries. In the process lifting an uncountable number of people out of generational poverty as a result, either directly or indirectly.
  • While his opinion is subjective, putting that kind of statement out about Microsoft specifically, is suspect. It also gives public opinion of Microsoft one more thing to take and run with. I'm not saying Microsoft does everything right, but would he have made the same comment if Amazon or some other company had purchased it? At the end of the day, our culture fosters a lot of what might be deemed as unnecessary spending. In Microsoft's case, this was a business decision to help them remain relavent and continue to grow their gaming presence. This investment, if handled properly, could yield huge returns over the long-term. Additionally, if he's honestly upset that Microsoft chose to buy a company instead of donating, maybe Microsoft will consider donating money to one or two of his causes. Although, this article might shed some light on why he feels the way he does about Microsoft. https://www.reuters.com/world/world-bank-seeks-100-bln-donations-address...
  • Microsoft is a business. They do not owe their revenue to charities, doubly so for foreign nations in which they likely have small footprints (if any), regarding their business operations. There is no obligation on their part to donate their money to the poor, even if it is what is ethically best for the poor, and something individuals might feel better about as a whole. It is not as if Microsoft put this money into Activision after mulling it over as a donation to charity. It was going to be their personal spending either way or held in their own funds for future spending. Microsoft is still paying massive corporate taxes that are SUPPOSED to be used for issues such as these (at least domestically). A hard look should be taken at how efficiently governments are distributing that taxes income to programs meant to improve lives. I would imagine there is quite a lot of poorly managed waste, in that regard.
  • Well, perhaps the World Bank and IMF could you know forgive the loans and relax the payments due by poorer nations. Just sayin'. I find it incredibly disingenuous that they “advocate” for poverty reduction yet they issue Loans not Grants. The former has repayments attached to it. Grant funding does not.
  • Maybe the bank chief should have opened his pocket book and purchased it.
  • This is a bank guy commenting on how corporations work? This is rich.
  • MS isn't some magical creature from the nether realms.
    It is collection of hundreds of thousands of people, working to provide goods and services millions of people find useful enough to pay for. Every last one has a job to carry out as best they can or they get fired.
    Among those Nadella and Spencer are employees of the shareholders and their jobs are to give their bosses the best return they can on their investment. If they fail, they get fired.
    So who are those shareholders?
    Well....
    https://money.cnn.com/quote/shareholders/shareholders.html?symb=MSFT&sub.... 72% are institutions. 48% are mutual funds, managing the IRAs of working stiffs and retirees.
    Only 6% are individuals. Plural. A few thousand. All the billionaires divested from MS 20 years ago or died. The grandstanding idiot of the OP knows this.
    He also knows that a big chunk of MS annual income is immediately paid out as dividends to those stockholders--$16B in 2021 which is more than the combined 2021 profits of Activision and EA. That is capitalism.
    It is also Nadella and company doing their jobs a lot better than the World Bank idiot. Because *he* is the one being paid to help the third world poor. He is just trying to deflect attention from how bad he does his job.
    If the world bank got more countries to truly commit to honest capitalism (not the crony-driven thief regime pretense of capitalism) they wouldn't be panhandling nor expecting others to do *their* job.
  • Dumb. ROI and Shareholder value is all that matters.
  • lots of non profits I volunteer for benifit from Microsoft generosity. I think they are doing a fine job at playing their part.
  • See I'd be inclined to agree with this IF Microsoft weren't a multi trillion dollar company. This would be like you or I having two grand in the bank and buying a video game, it's nothing.