Since his 2014 promotion into the technology titan’s corner office, Nadella has embarked on a pricey shopping spree. It started with the $2.5 billion acquisition of the company behind the hit game Minecraft. Later, Microsoft bought LinkedIn for $26 billion and the speech recognition and artificial intelligence software developer Nuance for $20 billion. Activision Blizzard was by far the largest disclosed target, at $69 billion.
Microsoft is busy fighting U.S. trustbusters for the right to absorb the “Call of Duty” creator. Putting it under the same roof as gaming console Xbox has led to regulatory concerns about market dominance. Even if Nadella loses out on the video-game company for competition reasons, however, owning Netflix would make strategic sense and probably be an easier sell in Washington and Brussels.
The two companies are already closely aligned. Netflix chose Microsoft as its advertising partner for a new advertising-supported subscription service. Microsoft President Brad Smith also sits on the Netflix board. Part of the rationale for a deal is that Microsoft wants to offer a video-game streaming service over multiple devices.