Microsoft's Activision Blizzard purchase under fire from World Bank chief
The Global Bank president isn't thrilled about Microsoft spending almost $70 billion on Activision Blizzard.
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 each year and regularly donates to charitable causes.
Microsoft has not yet responded to media requests for comment.
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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 firstname.lastname@example.org.